AIB’s chief executive Mr Michael Buckley said today he felt "absolutely betrayed" by Allfirst’s treasurer Mr David Cronin’s response to inquiries about unusual trading in Baltimore.
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Mr Michael Buckley
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Speaking at a press conference in Dublin today, Mr Buckley vigorously restated that he only became aware of the $691 million loss at Allfirst in February this year.
He desribed the alleged fraud at the US subsidiary as "devious and very cleverely executed. "
Mr Buckley said that following a conversation with a market source last May who mentioned concerns in the capital markets about the size of Allfirst’s trading, he rang Mr Cronin in Baltimore.
After looking into the matter, Mr Cronin responded by e-mail that there had been no unusual or extra large transactions and that Allfirst’s average turnover was $159 million.
After this correspondence Mr Cronin began to receive daily reports on Mr Rusnak’s trading. These reports told a different story but Mr Cronin failed to inform AIB of his discovery. The daily reports showed that Mr Rusnak was in fact an extraordinarily active trader.
They showed that he traded instruments with notional positions totaling hundreds of millions of dollars—and sometimes billions of dollars each day.
On some days the turnover reached nearly $4 billion, more than 20 times the amount the treasurer told Mr Buckley was the daily turnover in response to his May 2001 inquiry.
By the end of December 2001 turnover in FX trading had reached $25 billion. It was at this time when Mr Cronin contacted Mr Rusnak’s direct supervisor Mr Bob Ray about shutting out his positions.
The subsequent internal investigation uncovered the massive losses incurred by Mr Rusnak.
The report says that over time Allfirst’s management had increasing problems with Mr Cronin’s performance.
Although Mr Cronin’s written performance evaluations were generally positive, Allfirst chief executive at the time Mr Frank Bramble and his successor as chief executive, Ms Susan Keating, state that they found the treasurer’s "energy and commitment levels to be wanting", and his analysis of problems to be often "academic and not practical."