The directors of AIB and its US subsidiary Allfirst are expected today to finalise their response to Mr Eugene Ludwig's investigation into the $691 million (€789.35 million) fraud at the US bank. AIB has indicated that a summary of the report together with the board's decision will be issued later today or tomorrow.
The boards of both banks attended Mr Ludwig's presentation of his report at AIB's headquarters in Dublin yesterday. The meeting began just after 9 a.m. The two boards were expected to meet together and then separately to consider the findings of the report which is believed to be about 40 pages long.
The bank will have to speak with its regulators in the Republic and in the US ahead of any decision to remove key personnel. AIB shares gained ground yesterday ahead of the bank's announcement closing at €12.95, up 26 cents.
Labour Party finance spokesman, Mr Derek McDowell, yesterday called for senior AIB executives to appear before the Oireachtas Committee on Finance and General Affairs.
Mr McDowell said there were questions of consumer interest and public policy. "The problem at Allfirst has financial implications for large numbers of Irish people either as customers or shareholders in the bank. Huge numbers of people are indirect shareholders in the bank through their pension funds. Now that AIB has received its internal report, I believe it is time they share the preliminary lessons with regard to this affair with the public at large," he added.
Mr McDowell said that what lessons may be learned from AIB's experiences could have implications for other financial institutions and those charged with regulating the sector.
AIB chairman, Mr Lochlann Quinn, has said Mr Ludwig will detail how the fraud occurred, where the weaknesses in its controls existed together with recommendations. The report will identify the roles of the various individuals but it will be up to the board to decide how the issues involved should be addressed.
The boards will decide which individuals should part company with the bank in an attempt to restore credibility and reassure investors.
Mr John Rusnak, the foreign exchange trader who perpetrated the fraud, has already left the bank and four officials at Allfirst have been suspended on full pay pending the outcome of the investigation. They are: Allfirst head of treasury and executive director, Mr David Cronin; Mr Robert Ray, senior vice-president of treasury funds management; Ms Jan Palmer, senior vice-president of investment operations; and Mr Rusnak's immediate superior, Mr Larry Smith, who was responsible for verifying his trades.
Allfirst chairman, Mr Frank Bramble and the bank's chief executive, Ms Susan Keating, are also in Dublin to attend the board meetings and - depending on Mr Ludwig's findings - may come under pressure. The board will also have to consider the extent of any knowledge about a potential problem amongst the bank's executives in Dublin and whether they should have taken earlier action to prevent the massive fraud.
