The investigations into the loss of $750 million (€859.5 million) at Allfirst's foreign currency trading department in Baltimore received a temporary setback at the weekend when a key bank official under suspension was rushed to hospital, apparently suffering from stress.
Mr David Cronin, executive vice-president and treasurer of the department responsible for foreign currency trading, was taken to a Baltimore hospital on Sunday suffering from chest pains and was later discharged, according to an acquaintance. He is the most senior of three top executives suspended on Monday last week when the loss came to light.
Mr Cronin first became suspicious of the currency dealings of trader Mr John Rusnak at the end of December and sought to reduce Mr Rusnak's exposures during January, according to Allfirst chairman Mr Frank Bramble, who gave the information at a press conference on Wednesday without naming the Treasury officials involved. He began what Mr Bramble described as a "conversation" with the currency dealer about his activities, which climaxed with the discovery over the weekend of February 2nd-3rd of numerous fictitious trades.
Meanwhile, the outsider appointed by AIB to establish what went wrong arrived at Allfirst headquarters in South Charles St, Baltimore from Washington yesterday. Mr Eugene Ludwick, a former comptroller of the US Currency and a managing partner of the Promontory Financial Group, said AIB "wants an independent outside authority to direct the investigation and that's the right way to do it. They have asked me to establish exactly what happened so that it never happens again."
A group of experts from Promontory is expected to move into the bank this week to join a 15-strong AIB team from the group audit and treasury operations in Dublin under Mr Con O'Sullivan, deputy to group finance and risk director Mr Gary Kennedy. The Federal Reserve Bank in Richmond, the Maryland bank supervisor, the US Attorney's office and the FBI are also investigating the debacle.
While the AIB team has been given until March 9th to find out how Mr Rusnak racked up losses of $750 million without triggering control alarms, Mr Maurice Crowley, chief financial officer at Allfirst, said the "whole effect" of the affair would be included in the AIB and Allfirst financial statement on February 20th. Mr Crowley said he had no knowledge of a report that Goldman Sachs had become so concerned with Mr Rusnak that it stopped trading with him some time before his activities came to light.
FBI spokesman Peter Gulotta said yesterday that no charges had yet been laid against the trader, who lives in a Baltimore suburb with his wife Linda and two children, and that it might be some days before the US Justice Department decided what action to take.
Mr Rusnak, who received $100,000-$200,000 annual bonus in addition to his $85,000 salary according to AIB officials, has not returned to the bank's headquarters where he worked until February 1st. With the FBI involved "it is out of our control at this stage", Mr Crowley said. The investigations are centred on how Mr Rusnak evaded bank controls to create fictitious transactions.
