ALLIED Irish Bank yesterday appointed a top US financial expert to investigate why the firm failed to notice a US$750 million (£500 million) loss notched up by rogue trader John Rusnak.
AIB said it has appointed Eugene Ludwig, managing partner of Washington-based Promontory Financial Group, to head the investigation into losses run-up by the bank’s Baltimore-based subsidiary Allfirst.
But details of the report, which will be com
pleted over the next 30 days, may remain secret, as AIB hinted yesterday it would not publish the study.
The appointment comes amid mounting speculation there will be further high-level suspensions at the firm in the wake of the scandal.
AIB has already suspended a number of senior Allfirst executives, but it is understood Allfirst chairman Frank Bramble may be next in line for disciplinary action, along with Allfirst chief executive Susan Keating.
AIB declined to discuss their fate last night. A spokesperson said: "This is pure speculation and as such we wouldn’t comment on it."
Commenting on the appointment of Ludwig, AIB chief executive Michael Buckley told Irish radio yesterday: "He is, I would say, peerless in terms of his qualifications to provide an independent report that our board can act upon in full confidence."
Earlier, an AIB spokesman confirmed that the company believed Rusnak had falsified documents to cover a spiralling list of bad investments.
Falsifying documents carries a 30-year jail sentence and a fine of up to US$1 million.
It remains unclear whether Rusnak profited personally from the fraud, although the man’s lawyers claim that he did not.
An AIB spokesman said documentary evidence pointed to some level of internal and external collusion.
Experts have been shocked that AIB failed to detect the kind of sums Rusnak was trading for over a year, and that safety measures taken by others after rogue trader Nick Leeson brought about the collapse of Barings Bank in 1993 had not been introduced at AIB.
Stung by criticism of the bank’s management and questions about internal supervision, Buckley stressed he believed existing security had been adequate.
He said: "This was a fraud - there is no question about that. He [Rusnak] set out diligently, deliberately and deviously to get around the controls that existed and to construct bogus contracts."
