Two Citibank foreign exchange traders fired

Two foreign exchange salesmen at Citibank have been fired for their dealings with Allfirst trader Mr John Rusnak, who lost $691.2 million (€783 million) at the AIB-owned bank in Maryland over five years.

The two employees, Mr Richard Marra based in New York and Mr Joseph Craven in Singapore, who had been suspended with pay two weeks ago, were dismissed "for reasons unrelated to trading activities", a spokesman for the parent Citigroup company in New York told The Irish Times.

The bank declined further comment but it has been learned that the salesmen were suspended during internal investigations into improper entertainment expenses relating to their dealings with Mr Rusnak. Neither Mr Marra nor Mr Craven could be reached immediately for comment.

Meanwhile, a spokesman at Allfirst, reacting to speculation that president and chief executive, Ms Susan Keating may leave the bank over the trading scandal said last night: "Speculation that she is stepping down is absolutely false."

The sacking of two of Mr Rusnak's Citibank contacts raises questions about the bank's dealings with the trader, who held a "prime brokerage" account through which Mr Rusnak did much of his trading.

The Bank of America with which Mr Rusnak also had a prime brokerage account has investigated its dealings with Allfirst but has not disciplined any staff and is not expecting to do so. Mr Rusnak was lavishly entertained and taken on trips and to sporting events by banks that wanted his business.

Mr Eugene Ludwig in his report on losses at Allfirst for AIB said: "Many brokerage firms wanted to cover Rusnak. The brokers and traders heavily entertained Rusnak, with meals, hotel stays, golf trips, Super Bowl tickets and other travel."

Mr Rusnak dealt with Mr Marra when the foreign exchange salesman worked at Merrill Lynch, and switched his Allfirst account to Citibank when Mr Marra moved there in February 2000.

Mr Rusnak described himself privately as one of the world's top 10 currency dealers and has related to friends how banks vied for his custom as his currency dealings grew until in 2001 they amounted to a staggering $225 billion. Citibank and Bank of America were implicitly criticised in the Ludwig report over their dealings with Mr Rusnak.

The size and scope of Mr Rusnak's trading would have appeared unusual to "anyone paying attention" in the banks with which the trader had prime brokerage accounts, the report said. Citibank has responded: "The report makes clear that responsibility squarely rests with Allfirst personnel."

A Citibank spokesman pointed out last week that Mr Ludwig specifically noted that Citibank "took the proactive step of bringing a large exposure to the attention of the parent company AIB to be sure that they were aware of the exposure; in fact, the report characterises this as an opportunity to detect the fraud that was missed by Allfirst and AIB."

A Bank of America spokesman said on Friday that entertainment was part of the process of attracting profitable business.

"In our investigation to date we have not found that any of our employees received improper benefits from Mr Rusnak," a spokesman said. He added: "All the checks and balances of our prime brokerage service performed properly with respect to the Allfirst account. We continue to conduct our own internal review of Bank of America's interactions with Mr Rusnak and the bank's prime brokerage relationship with Allfirst."