AIB should face Dail over fraud - Labour

AIB officials should be called before the Dail to explain the €746m loss it made through a complex fraud at a US subsidiary, the Labour Party said today.

The party made the call as the boards of AIB and the subsidiary Allfirst received a report on how Baltimore trader John Rusnak was to make massive losses over several years.

The boards were being briefed by former bank currency controller Eugene Ludwig in Dublin who will suggest how to avoid such a future catastrophe and whether heads should roll.

Details of the Ludwig report are expected to be made public in the next few days.

The Labour Party today called on the bank to share the report’s details and said officials should be brought before the parliamentary committee on Finance and General Affairs.

Finance spokesman Derek McDowell said lessons needed to be learned from the affair.

‘‘What executives did or did not know about the rogue trading at an AIB subsidiary is obviously a source of concern,’’ he said following reports that AIB group chief executive Michael Buckley was alerted by a contact in the currency markets about the size of Allfirst’s trading in May 2001.

The details of the disaster were made public in February this year at a press conference in which Mr Buckley denied having any prior knowledge of the fraud - a statement to which the bank remains committed.

Mr McDowell continued: ‘‘This problem at Allfirst has clearly financial implications for large numbers of Irish people either as customers or shareholders of the bank.

‘‘Huge numbers of people are ‘indirect’ shareholders in the bank, through their pension funds.

‘‘What happened, how it happened and perhaps most importantly making sure it never happens again are important public policy issues,’’ he said.

The Ludwig report is said to disclose that in May 2001, following the alert, Mr Buckley, then chief executive designate, quizzed the head of the treasury operation at Allfirst, David Cronin, on the warnings.

Mr Cronin was said to have told Mr Buckley that trading volumes at Allfirst were not unusual but their concentration with two banks may have made them seem larger than they actually were.

Mr Cronin has been suspended on full pay pending the outcome of the investigation.