AIB misled watchdog on €25m scandal

THE €25 million overcharging scandal at AIB bank could have been detected as far back as 1998, it emerged last night.

The bank was asked by the consumer affairs director in March 1998 to audit all customers charges. It told the then-director, charges were in order even though foreign exchange customers were being asked to pay twice the appropriate rate.

When asked, yesterday, whether anyone in AIB was aware of the overcharging at the time of informing the consumer affairs office that all charges were in order, a bank spokesman had no comment to make.

The Irish Financial Services Regulatory Authority (IFSRA) is currently investigating whether it was an administrative error or a deliberate policy, and how it managed to remain undetected for so long.

Investigators from the IFSRA moved in on AIB last week ago after a tip-off from inside the bank.

The bank admitted it had overcharged customers on foreign exchange transactions by €25m since 1996. On Wednesday it lodged this sum with the Central Bank to cover repayments.

The bank, which made €1 billion in profits last year, was earning a commission of 1% on foreign exchange deals when it should have levied just 0.5%

AIB yesterday appointed former comptroller and auditor general Lauri McDonnell to head its internal inquiry into the affair, due for completion next month. Results will be given to the IFSRA and the AIB board.

One top official from AIB's head office in Dublin has been put on paid leave.

Senior AIB management, the governor of the Central Bank and IFSRA officials will appear before the Dáil finance committee next Thursday.

The bank has apologised for the error and after an extensive trawl of records has identified two-thirds of those who were affected, but no refunds will be issued until August as a repayment process has yet to be established.

The IFSRA and AIB said they had received 1,900 calls, as of yesterday evening, to a helpline set up for those who believe they may have been overcharged.

An IFSRA spokesperson said most of the calls were requests for information about the overcharging from people unsure if they had been affected and were entitled to a refund.

The AIB helpline number is 1800 787 564, and the line is open from 9am to 5pm today and tomorrow. During the coming week it will be open from 8am to 8pm.

The IFSRA can be contacted on 1890 777 777, and the line is open from 9am to 1pm today. Messages can be left outside those hours.