Irate AIB shareholders in US must seek compo in Irish courts

IRATE Allied Irish Banks shareholders in the US, furious at the €658 million rogue trading loss by subsidiary Allfirst, have been told to look to the Irish courts for compensation.

In the US, a judge has dismissed a lawsuit seeking to force Allfirst executives and directors to personally repay 658 million lost in the currency trading scandal which rocked the bank last year.

Allfirst, is a subsidiary of AIB and is being sold to M&T Bank Corp (MTB), Buffalo for 3.1 billion.

Baltimore Circuit Judge Albert J Matricciani Jnr has ruled that Irish law applies in the case.

The ruling comes as a blow to Tomran Inc, an Allfirst depositor and owner of 4,800 shares of Allied Irish Banks.

Tomran sued former and current Allfirst directors and officers in May, claiming they were negligent in their duties and should repay the Baltimore bank for the losses incurred by rogue trader John Rusnak.

Tomran attorney Cyril V Smith said the company is considering an appeal.

"We believe we laid out a meritorious case," Smith said.

"We need to give some thought about what our next step is," he added.

Tomran attorneys argued Judge Matricciani should take on the case because Allfirst is a Maryland chartered institution, the fraud was committed in Maryland and most of the defendants live in the state. Attorney Mark D Gately, who represents one of the defendants, former Allfirst treasurer David M Cronin, said he was

"delighted with the result and the reasoning".

"I think that everyone knew Irish law controlled," Gately said. "At the end of the day, this is an Irish law corporation, and because of that, Irish law has to govern the rights and remedies of its equity holders.

Tomran's lawsuit was filed three months after Allfirst stunned the

business world on February 6 last with its announcement of the 658 million loss.

Allfirst accused currency trader John M Rusnak, 38, of hiding the losses through fake trades entered into the bank's computer system. Prosecutors said Rusnak did not profit from the false trades but hid the losses to maintain his salary and bonuses.

Rusnak was fired along with six co-workers and supervisors whom the bank said failed to detect the fraud over a five-year period.

Rusnak pleaded guilty in October to one count of bank fraud, part of a plea bargain that calls for him to serve seven years in prison. Rusnak is expected to be sentenced this month.

Allied Irish agreed in September to sell Allfirst to M&T Bank in a 3.1 billion deal that is expected to be completed in early 2003.

Tomran's lawsuit named 15 directors and officers, including Frank P Bramble, Allfirst's former chairman, who took early retirement shortly after the losses were made public, and Susan C Keating, the banking company's former president and chief executive, who resigned in July.