Allied Irish Bank to set up confidential whistle-blowers' helpline

AIB IS to set up a confidential whistle-blowers' helpline to avert further scandals. Chief executive Michael Buckley admitted there was a culture of self-censorship in the bank.

He said the helpline would allow staff who had concerns about banking practices to pass them on.

"Part of my agenda is to make sure that people feel free to speak their mind without retribution." AIB's illegal foreign exchange charges, which amounted to €25.6 million, went unexposed for eight years until a member of staff contacted the Irish Financial Services Regulatory Authority (IFSRA) in April.

IFSRA, in its progress report yesterday, revealed the bank also overcharged almost 90,000 customers in 24 separate categories by €8.1 million. At AIB's group headquarters in Ballsbridge in Dublin, Mr Buckley said it was only in May he became aware of the three-million illegal foreign exchange transactions, in which customers were charged 1% instead of the permitted 0.5%.

He said it was most worrying that the whistle-blower did not trust AIB to deal with the problem.

The confidential helpline will be based in Britain and will be run by an independent company. AIB staff will also have the opportunity to contact the chairman and chief executive directly.

AIB commissioned a report into its banking culture, which found that there were downsides to the "can-do" attitude of staff and that there was a failure to correct mistakes quickly.

But Mr Buckley, who is retiring in February 2006, denied the culture of the bank was corrupt.

IFSRA, which is continuing to investigate if AIB staff covered up the overcharging scandal, said it had been contacted by several other whistle-blowers.

Chief executive Liam O'Reilly said: "it's an unhealthy situation if an institution has to work on the basis of whistle-blowers. A good company would deal with its problems."

AIB chairman Dermot Gleeson said serious errors had been made.

"I think when a bank messes up like this, it's appropriate for contrition to be expressed. It represents a breach of trust which should properly subsist between a bank and its customers."

The cost of repaying all the foreign exchange customers, as well as those who were overcharged in other incidents, will be €34.2 million.

AIB said it will identify up to 90% of the foreign exchange customers through computer and manual searches. It pledged to continue its searches to identify the remainder.

AIB is the country's largest bank, with 1.5 million customers and 25,000 staff. Two years ago, it revealed that John Rusnak, a trader at its US Allfirst subsidiary, had lost €690 million.