(c) 2002 Irish Echo Newspaper Corp. By Stephen McKinley
Allied Irish Banks (AIB) has announced a full investigation into the disappearance of $750 million and one of their employees, John Rusnack, from the bank’s U.S. subsidiary in Baltimore, Allfirst Financial, and confirmed that the FBI were assisting with the investigation,
AIB said that Rusnack, an American citizen and foreign exchange trader in his 40s, had been co-operating with an inquiry, but that he failed to turn up for work on Monday.
In a press statement, AIB baldly stated that the bank was “undertaking a full investigation into foreign exchange trading operations at the Baltimore Headquarters of its US subsidiary Allfirst.
This decision follows the uncovering by Allfirst management of suspected fraudulent activities by one trader who has since failed to report for work.”
AIB shares fell 23 percent when the news broke, but recovered some of this losses during Wednesday’s trading in Dublin.
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“It’s a heavy blow, but not a fatal one,” said AIB Group Chief Executive Michael Buckley. He moved quickly to make a distinction between this case and the Nick Leeson case in 1995, when a British foreign exchange trader in Singapore ran up such losses for Barings bank that it collapsed after losing $1.17 billion.
“We are hugely disappointed that our Allfirst control procedures failed to uncover this situation at an earlier stage. The investigation now underway will determine not only how it arose but also how we can guard against any recurrence. The Group’s underlying business and profitability momentum is not impaired by this once-off blow. Our capital adequacy continues to be strong,” Buckley continued, adding, “this was a very complex and a very determined fraud.”
In the Dail, Taoiseach Bertie Ahern told TD’s and AIB’s 31,000 staff, 98,000 shareholders and account holders, that they need not be concerned.
“The capital base remains strong, there is no danger to AIB account holders of any loss of funds or indeed to the sovereignty of the bank,” Ahern said.