AIB has played down an allegation that it conducted a share price support operation for an oil exploration company's shares in the 1980s.
A former AIB head of internal audit, Mr Tony Spollen, alleged the bank transferred Dana shares into the widows' and orphans' account in the AIB staff pension fund in 1988 in a bid to support the exploration company's share price. The shares were issued by Dana but were underwritten by an AIB subsidiary, Allied Irish Securities. Responding to the allegation, an AIB spokeswoman referred The Irish Times to an explanation offered by the bank's chairman, Mr Lochlainn Quinn, at its annual general meeting last year. Mr Quinn said the bank hired two independent London law firms, which were expert in the securities industry, to investigate this issue. "They made a report to the board saying no offence had ever occurred," he said.
The Irish Stock Exchange had no comment to make on the allegation.
Mr Spollen made the allegation following what he described as "scurrilous remarks" made about him by an AIB former chief executive, Mr Gerry Scanlan, at the inquiry on Monday.
Mr Spollen told the Dail Committee of Public Accounts: "The issue which drew the line for myself and Mr Scanlan - and I hate having to go through this - was a failed share issue by AIB and underwriting.
"It went badly wrong and rather than face the music and admit it . . what happened was the shares were put into the widows' and orphans' accounts, into the staff pension fund accounts. The Stock Exchange was never informed."
The former head of internal audit has also alleged that Mr Scanlan had instructed him to change an audit report, but he refused.
AIB has categorically denied this allegation. In a statement, the bank said Mr Spollen was requested by the bank's legal adviser to remove a comment which was "hearsay and possibly defamatory". He was also asked to include in the report facts, which by their omission rendered the report incomplete. Mr Spollen refused.
The bank statement adds that its legal adviser intervened and advised Mr Spollen that the recommendations were "appropriate" and should be followed. "Mr Spollen again refused the bank's legal adviser, and his report was issued in its original form."
A "leaked" memo written by Mr Spollen in 1991 which warned senior executives the bank had a potential £100 million DIRT liability arising out of non-resident accounts led to the committee's inquiry. Mr Scanlan has rejected the £100 million figure, saying the basis for the calculation was "infantile" and "very childish".