INQUIRY: The Ludwig report on trading at Allfirst states that the sheer size of Mr John Rusnak's positions and trading provided "opportunities for Allfirst and AIB to examine Mr Rusnak's trading more closely".

One such opportunity occurred in March 2000 when AIB group treasurer Mr Pat Ryan received an inquiry from Citibank as to whether Allfirst could cover transactions by Mr Rusnak in which more than $1 billion (€1.13 billion) was expected to be exchanged with Citibank.

Allfirst's risk-assessment staff was asked by an AIB Group treasury staff member to make a "discreet" inquiry and AIB was told that the transaction was a net settlement offset by a larger figure owed by Citibank, the report states.

It adds: "No one at either bank followed up with any inquiry as to why the offsetting gross Citibank positions were so large."

The report however does not detail another opportunity around the same time for AIB and Allfirst to examine Mr Rusnak's trading more closely.

This was the escalation to AIB level by Bank of America of an unusual synthetic loan totalling at least $50 million that Mr Rusnak was negotiating.

This was reported extensively in the New York Times and The Irish Times.

Referring to an Irish Times account, the Ludwig report states in a footnote: "We note that one press account has asserted that in 2001 officials from Bank of America flew to Dublin to meet with AIB personnel with respect to a 'disputed transaction' involving Mr Rusnak.

"We have found no oral or documentary evidence at Allfirst and AIB to substantiate that account, and a representative of Bank of America has advised Allfirst that the press account is false."

The account, however, was based on information volunteered to The Irish Times by a Bank of America executive in New York authorised to talk about the disputed deal. The executive said a Bank of America team travelled from London to meet AIB officials.

When AIB sources responded that they had no record of such a meeting and that such a deal had not been an issue with the bank, the official, contacted again, repeated that the meeting, without question, had taken place, and later said the encounter between the two banks might have been conducted by conference call.

One of those stated to be involved was the client manager for AIB at the Bank of America's Dublin office (who has since left the bank).

This week Bank of America sources confirmed once more that, even if a face-to-face meeting did not take place, the Rusnak dispute was escalated by Bank of America to parent-bank level in Dublin early last year.

The contents of an e-mail sent by Rusnak to Bank of America threatening to pull his business if he did not get better terms - which precipitated the escalation - were also published this week in the New York Times and The Irish Times, and are not disputed by Bank of America sources, who also say that the contents of the e-mail were made known to AIB.

This poses the question why the Bank of America intervention with AIB, which also underlined the sheer size of Mr Rusnak's positions, was not gone into in the Ludwig report, and why there is no sign in the report of any attempt to identify the AIB official or officials who responded to Bank of America.

The answer may be found in AIB chairman Mr Lochlann Quinn's remark at yesterday's press conference. He said that Mr Ludwig could only investigate within AIB what had happened and that "Mr Ludwig has no right or authority to land into any other institution and ask them what was going on".

In other words, Mr Ludwig had to rely largely on records available within AIB.

Mr Rusnak's version of events are not included in the report: on legal advice he is confining his testimony to the Federal Bureau of Investigation.

However, sources close to the federal investigation say, by his account, the former Allfirst treasury head, Mr David Cronin, told him that the deal should go through on the instructions of an AIB treasury official.

Like the Citibank transaction, no one at AIB appears to have followed up with any inquiry as to why Mr Rusnak was conducting such an unusual deal - which, as events transpired, he was forced into doing, along with similar options deals with three other major banks because his losses the previous year had grown so massive, amounting at the time to $211 million.