It must now be clear to AIB executives, its shareholders and regulators, that the flow of information between Baltimore and AIB's Ballsbridge headquarters was wholly inadequate, which raises concerns about what might be going on in other parts of the group
AIB has always prided itself on the strong management team that has generated huge profits and led the expansion of the group over the past decade.
But after reporting a $750 million (€864 million) fraud, the credibility of that elite group has been severely dented and it seems inevitable there will have to be changes at the very top of the Republic's biggest bank.
The bank is run by a nine-member group executive committee, led by group chief executive Mr Michael Buckley. That executive committee will ultimately have to answer to the board of directors and the shareholders for the fiasco.
The committee, which meets monthly, includes the key executives responsible for the various divisions within AIB Group. Mr Buckley and two other committee members - head of finance and risk management Mr Gary Kennedy and chairman of the US operations Mr Frank Bramble - are also directors of AIB group. The committee reports to the board of directors and chairman Mr Lochlann Quinn.
Mr Bramble is the former chief executive of AIB's Allfirst subsidiary in the US and has been a long-serving member of the committee and the board of directors.
He is AIB's highest paid executive, earning $1.7 million in 2000, substantially more than the group chief executive and would be regarded as the bank's authority on what was going on across the Atlantic.
Just last month, Mr Buckley beefed up the representation of its US business on the committee, appointing Allfirst president and chief executive Ms Susan Keating to the body. She has attended the only group meeting since. The bank insists the matter was not raised at that meeting.
According to AIB, Ms Keating was first told of the $750 million problem an hour before she rang Mr Buckley last Monday night. She was informed by members of her management committee and five staff, including three senior executives, were suspended.
Mr Buckley has said he was "shocked" and "enraged" by Ms Keating's news and immediately despatched two senior executives from the Irish treasury division to clean up the mess.
It must now be clear to Mr Buckley, to AIB shareholders and to its regulators, that the flow of information between Baltimore and Ballsbridge was wholly inadequate.
That raises concerns about what might be going on in other parts of the group.
The group executive committee's main function is to draw up a strategy for the bank in terms of how it should develop and grow the business and to manage its day-to-day operations. It is given a fair degree of autonomy but does have to seek board approval for major strategic plans, according to AIB.
Mr Kennedy was given a broader role within the committee last month and is now the executive with responsibility for the finance and risk management operations that are under the spotlight.
The bank says that Mr Kennedy's re-emergence on the financial and risk management side of the business in the past few weeks does not have any link to the discovery of the $750 million fraud.
The board of directors will be looking for immediate assurances that dubious practices with potentially disastrous consequences are not prevalent throughout the group.
Mr Buckley and his colleagues are likely to have to bring proposals to the board on how controls could be tightened up or improved.
Market analysts are openly stating they want to see heads roll at the highest level and a strong management structure put in place.
Attention will have to be paid to AIB's relationship with and controls over its various operations to reassure the markets and shareholders that the fraud is an isolated incident. These include units in Poland, headed by group executive committee member Mr Gerry Byrne; a capital markets division, which includes treasury and international business; and Goodbody Stockbrokers. As of last night, international treasury operations will be controlled throught Dublin.
Other members of the group executive committee are: Mr Aidan McKeon, managing director, AIB UK and Northern Ireland; Mr Eugene Sheehy, managing director of AIB's banking division in the Republic; and Mr Mike Lewis, head of human resources.
This week senior management were caught napping and the bank has been punished. A new management structure and increased vigilance by the board of directors is the first necessary step towards rebuilding AIB's international reputation. Mr Quinn and the board will have to take some tough decisions in the near future if they are to restore confidence.
