AIB pores over 'fraud' report

March 13, 2002 Posted: 1:24 PM EST

DUBLIN, Republic of Ireland - The board of Allied Irish Banks has gone into a second day of discussions about the findings of a report into how it became the victim of a suspected currency fraud.

After spending more than 14 hours on Tuesday, the meeting continued throughout Wednesday, sources told CNN. The fate of key players should be known by Thursday morning.

Ireland's biggest bank has said U.S. trader John Rusnak racked up losses of $691 million on unauthorised currency trades. Admissions by AIB Chief Executive Michael Buckley that losses extended back to 1997 have raised questions about his future and that of other executives at the bank.

"Who knew what and when is the question," Ian Hodges, a banking analyst at Barclays Stockbrokers, told CNN. "Senior managers in Dublin or Boston knew of the losses and heads will roll."

Rusnak's suspected fraud has caused concerns over the ability of financial institutions to control risk-taking by traders. AIB's losses have drawn comparisons with Nick Leeson who brought Britain's Barings Bank to its knees in 1995.

Rusnak, a 37-year old father-of-two who worked for AIB's Boston-based treasury business AllFirst, has denied stealing any money and so far has not been charged with any crime.

Independent watchdog Eugene Ludwig, appointed to investigate AllFirst and Rusnak's activities, handed in his report to the bank's chairman on March 9 and presented his findings to the board on Tuesday.

Buckley has said the first he knew about the losses was in February, although information about big currency trades at AllFirst had been passed on to him in May. That "informal comment" prompted Buckley, who was the bank's chief executive designate, to make inquiries that apparently satisfied him.

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