Allied orders fraud inquiry

Rusnak: Questioned by the FBI over the alleged multi-million dollar fraud

DUBLIN, Republic of Ireland (CNN) -- Allied Irish Banks has ordered an external inquiry into a suspected $750 million fraud and is shifting more control of its business from the U.S. to its Dublin headquarters.

The decision by Ireland's largest bank followed a crisis board meeting on Thursday.

It came as the Federal Bureau of Investigation and U.S. federal prosecutors questioned 37-year-old trader John Rusnak, who works for AIB's U.S. subsidiary Allfirst in Baltimore, Maryland.

Allied Irish has suspended five executives, including Rusnak, and stopped almost all international exchanges at Allfirst.

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Thursday's meeting was called to update directors and arrange the investigation.

A board statement said: "The board has expressed its extreme disquiet that controls and supervision of the treasury operations in Allfirst had failed to uncover, at a far earlier stage, the fraudulent activities, which resulted in the losses sustained.

"While accepting that these fraudulent activities were complex and may well have involved collusion and conspiracy, the board is determined that effective remedies be implemented as a matter of urgency."

Allied is to appoint an expert in the financial services industry to report back within 30 days.

Meanwhile, treasury activities by the AIB group are to be managed in Dublin, with the help of "an external expert."

The board repeated the company's view that profitability had not been harmed.

AIB Group Chairman Lochlann Quinn said: "Though this is a significant loss, customers and staff can be reassured that AIB remains strong."

'Not a fugitive'

The bank had called in the FBI following revelations on Wednesday that $750 million had gone missing and the trader had not arrived for work.

The bank alleges he disguised huge international exchange losses at Allfirst with trades he never made.

But Rusnak's U.S. lawyer says he has not stolen any money and has not been charged by authorities.

"My client is not a fugitive," Bruce Lamdin told The Associated Press. "We hope that things will take their natural course from here. That's up to the U.S. attorney's office."

Allied Irish chief executive Michael Buckley said in Dublin on Wednesday that it was unclear whether Rusnak had pocketed some or all of the missing money.

Rusnak, a married father of two, has worked at Allfirst since 1993. He was paid $85,000 a year, a modest amount for a currency trader with his experience.