Trader at centre of AIB suspected fraud meets FBI

The foreign exchange trader who allegedly defrauded the Allied Irish Banks (AIB) bank of €860 million has met FBI and US federal…

The foreign exchange trader who allegedly defrauded the Allied Irish Banks (AIB) bank of €860 million has met FBI and US federal prosecutors voluntarily, according to his lawyer.

Rusnak
Mr John Rusnak, who is suspected of
stealing $750mn from Allfirst bank

Mr Bruce Lamdin said no charges had been brought against Mr Rusnak by authorities. Mr Rusnak (37), from Baltimore, worked for AIB subsidiary Allfirst.

"My client is not a fugitive," Mr Lamdin said. "We hope that things will take their natural course from here. That's up to the US attorney's office".

Officials at Allfirst bank have acknowledged they do not know how Mr Rusnak allegedly defrauded them. Chief executive Ms Susan Keating told reporters that the trader "was a solid performer". She said: "Clearly the controls broke down. We don't fully understand how those broke down".

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Ms Keating said five employees in the Allfirst's treasury department had been suspended, including Mr Rusnak. She said that if Mr Rusnak showed up at Allfirst, he would be fired.

Shares in AIB, which slumped 15 per cent yesterday, bounced back today. They were up more than 4 per cent during early trading in Dublin.

AIB chairman Mr Lochlann Quinn spoke yesterday of "considerable evidence" pointing to internal and external collusion over the fraud.

At the AIB headquarters in Dublin, chief executive Mr Michael Buckley admitted it was "alarming" that the suspect trader's superiors had not known what he had allegedly been doing. "But someone who is determined and very expert and in a position to overcome that system can do it".

Mr Buckley said: "We are hugely disappointed that our Allfirst control procedures failed to uncover this situation at an earlier stage. The investigation now under way will determine not only how it arose but also how we can guard against any recurrence".

Mr Quinn insisted lessons had been learned from the Nick Leeson-Baring's Bank affair, said to have been different in a number of ways from the AIB events.

In 1995, Singapore-based trader Leeson brought down Barings Bank after running up losses of £862 million pound sterling on unauthorised trading in derivatives.

A spokesman for the Central Bank in Dublin urged account holders with AIB not to panic. He confirmed the Central Bank was also investigating the affair.

PA