Bank chiefs ‘covered up’ AIB scandal

KEY executives at AIB covered up the foreign exchange scandal, a report to be published today by the financial services regulator (IFSRA) has found.

The second investigation will disclose that when the mistake on the foreign exchange dealings was discovered, executives prevented the authorities from being informed to protect the bank’s interests.

Those executives found guilty, however, will not be named and shamed in the report, because they have sought legal advice since the second phase of the inquiry began.

In all, up to 10 AIB staff are still under investigation within the bank.

A spokesperson for AIB, which made over €1 billion in profit last year, refused to comment on the findings of the report ahead of its publication today.

Today’s report is 30 pages long, double the size of the initial investigation which found the bank guilty of overcharging customers to the tune of €25 million.

In its interim report in July, IFSRA found that the bank had failed to notify the regulator as required. It was also revealed that one million transactions and 200,000 accounts were affected by the scandal.

Chief executive Liam O’Reilly said the reason the financial regulator was following on with a second investigation was based on the belief that after the initial inquiry “there was a suspicion of a cover-up” by executives in the bank.

Appearing before an Oireachtas Committee meeting earlier this year, AIB chairman Dermot Gleeson apologised for the bank’s failure to identify the problem for eight years.

He admitted responsibility for blunders at the bank, but insisted there was no culture of overcharging at AIB.

He also revealed recent scandals at the bank would cost in the region of €50m.

IFSRA will also give details today of its investigations into the Faldor scandal involving former top AIB executives, including one-time chief executive Gerry Scanlan, and Roy Douglas, a former chairman of Irish Life & Permanent.

Faldor is also being investigated by the Revenue Commissioners.

Others under investigation for tax fraud under a scheme set up by a former AIB subsidiary are the late Paddy Dowling, a former AIB executive director, former director of corporate strategy Diarmuid Moore, and David Cronin, who was head of US treasury operations, which was embroiled in a trading fraud in 2002.

Five other AIB executives, including former chief executive Tom Mulcahy, were said to be facing serious questions over their tax affairs.

Mr Mulcahy resigned subsequently as chairman of Aer Lingus, while Mr Douglas alleged the leak about Faldor came from a high level within AIB.

Some of the named Faldor executives said they have dealt with the issue, while Mr Scanlan said the Faldor account belonged to his wife.