AIB reaction: AIB group chief executive Mr Michael Buckley said he accepted that certain people at management level within AIB were aware of the overcharging problem but they failed to report it "up the line".
Responding to the Irish Financial Services Regulatory Authority's (IFSRA) report yesterday, Mr Buckley said he was never made aware of the contents of the crucial memo prepared in 2002 that quantified the problem and recommended bringing it to the regulator's attention. The document wasn't circulated to his senior management team either, he said.
He refused to elaborate on the memo's contents, who ordered it and who it was circulated to, saying these facts were central to the disciplinary process that is under way at AIB.
"Who did what, when and where maybe germane to the disciplinary processes," he said.
Mr Buckley said the bank was not disputing IFSRA's findings on the eight-year foreign exchange overcharging or on the deal allocation and tax evasions issues. "Facts are facts. AIB is focused on putting it right," he said.
The AIB chief would not comment on the number of individuals who were facing disciplinary proceedings but up to 10 of its senior management are believed to have received letters from a sub-committee of the board charged with overseeing these actions.
"The report is carefully formulated," he said. "It recognises the rights of people to due process."
Mr Buckley said the disciplinary process would be "fair and rigorous" and the outcome would be reported to IFSRA. He could not specify when this might happen.
Many of the individuals who have been contacted in relation to this process have retained legal counsel, which could delay the proceedings. They are also entitled to appeal any findings, which could cover a range of sanctions including dismissal.
The foreign exchange overcharging was brought to IFSRA's attention by a so-called "whistleblower" within the organisation. IFSRA's chief executive, Dr Liam O'Reilly, said that AIB staff members should not feel they have to go to outside agencies to raise important institutional issues.
Mr Buckley acknowledged there was a need for the bank to help its staff to raise such issues at the appropriate level. "We need to give them the confidence to raise these issues. We have been doing a lot of work and training and have a new helpline in place. Staff also have a range of choices if their immediate boss is not very receptive," he says.
The bank recently commissioned consultants to examine the corporate culture which found that it was "sound", apart from some areas where work needs to be done, according to Mr Buckley.
These issues are expected to cost AIB about €50 million. Mr Buckley said the bank has separately invested millions of euro in improving its control systems.
Since these revelations were made public, the bank has not experienced any fall off in customer business in Ireland and AIB is to signal a strong performance in a trading statement to investors tomorrow, he said.
