Allfirst trader Mr John Rusnak was dealing in spot (price on the day), forward (at a future price) and over-the-counter options at the Allfirst foreign exchange desk. He had a trading limit of some $2.5 million.

According to AIB, the initial fraud involved writing bogus contracts and entering them into the bank's systems to cover his losses on real foreign exchange contracts. When he started to require increasing amounts of cash to settle his real losses, AIB alleges he wrote some very large "deep-in-the-money" foreign exchange contracts.

These are options giving the buyer the right to buy foreign exchange in the future at a rate set when the contract is written. The rate set is usually so attractive that buyers are almost certain to exercise the contracts - but they pay hefty premiums to get the options. Mr Rusnak, according to AIB, used these options to generate some of the cash he needed and failed to enter the liabilities involved on the Allfirst books. What is almost impossibe to understand is how Mr Rusnak's trading patterns or actions never came to the attention of Allfirst's control systems or treasury managment over a five-year period.

Mr Buckley reiterated yesterday his belief that the fraud could not have been perpetrated without collusion involving internal or external parties.,