The former chief executive of AIB Michael Buckley wrote to its then group internal auditor threatening him with personal liability for any financial loss arising from a concern raised by the auditor in an internal report, an Oireachtas committee was told today.
The claim was made by Fine Gael TD Fergus O’Dowd during a meeting of the Joint Oireachtas Committee on Economic Regulatory Affairs.
The current chief executive of the bank, Eugene Sheehy, who was appearing before the committee, said the bank did not have a copy of the letter Mr O’Dowd was referring to and Mr O'Dowd said neither did he.
The internal auditor at the time, Eugene McErlean, was at the hearing as an observer but would not comment on the matter afterwards. An effort to secure a comment from Mr Buckley has so far been unsuccessful.
The committee heard that Goodbody stockbroking firm, a fully owned subsidiary of AIB, was prohibited under company law from 1990 from purchasing or holding shares in the bank, and that this was interfering with its normal business.
A structure was put in place to allow the firm deal with the issue but in the 1990s Mr McErlean raised concerns that in time led to a closure of the structure. It was at around this time that the letter was sent by Mr Buckley, according to Mr O’Dowd.
A new scheme was put in place and approved by the AIB Group audit committee in July 2000. The hearing was told by Mr Sheehy that the scheme approved by the bank committee was not implemented in the way it had been presented.
Four months after the new arrangement was put in place Mr McErlean began another audit and identified apparent irregularities in the new arrangement. A special investigation was initiated.
Among the findings were that a company based in the Caribbean island of Nevis was involved in the structure and that, contrary to the agreed structure, Goodbody was involved in funding part of the scheme. A change in the law around this time meant the scheme was no longer required.
The committee heard that a press release issued by the bank at the time of a high profile press conference concerning the so called Ludwig report into the Rusnak fraud in the AIB subsidiary, Allfirst, included the statement that Mr McErlean was to no longer hold the position of group internal auditor.
Mr Sheehy said Mr McErlean had had nothing to do with the Allfirst issue and that he was “very sorry if he was offended by the way it came out”. He said the statement about Mr McErlean in the press release dealing with the Rusnak affair was “unfortunate and shouldn’t have happened” but he rejected the charge that it was deliberately done. Mr Buckley was the bank’s chief executive at the time of the press conference.
“It ruined his career,” Mr O’Dowd said. “He has been effectively blacklisted ever since.” Mr O’Dowd it was a “pay off” from the bank for Mr McErlean being a good auditor and raising his concerns about the Goodbody scheme.