Quinn says buck stops with Cronin

EXPERIENCE: Despite his extensive experience, David Cronin relied on a manager with limited knowledge to supervise John Rusnak

Mr David Cronin, the senior AIB executive sent to Allfirst as treasurer in 1989, had extensive experience of treasury operations generally. He worked as a currency trader and later managed an AIB trading operation with some 40 to 50 traders.

Despite his extensive currency trading experience, Mr Cronin relied heavily on Allfirst treasury funds manager Mr Bob Ray to supervise the activities of Mr John Rusnak. This was despite the fact that Mr Ray had limited knowledge of foreign exchange, according to the report. Mr Rusnak reported directly to Mr Ray.

Mr Cronin's reporting relationship was "de jure and partly de facto to Allfirst's senior management", according to the report.

Despite his position in the senior executive suite at Allfirst, Mr Cronin maintained strong ties to AIB in Dublin. Senior management at AIB and Allfirst respected Mr Cronin's treasury expertise.

"A former AIB chief executive stated that Mr Cronin's presence in Baltimore gave AIB comfort that Allfirst's treasury was in capable hands," the report states.

Mr Cronin was chairman of AIB's Asset and Liability Committee. He kept in close and constant contact with AIB in Dublin and in particular with Mr Pat Ryan, the group treasurer.

However, Mr Frank Bramble, Allfirst chief executive and later chairman, and Ms Susan Keating, Mr Bramble's successor as chief executive, found Mr Cronin's "energy and commitment levels to be wanting". Mr Bramble asked on several occasions that Mr Cronin's reporting relationships be changed to better supervise him "or that he be removed". Ms Keating raised the possibility in 2000 that Mr Cronin report to a new chief financial officer who could more closely monitor his activities.

Ms Keating thought "AIB would be displeased if the treasurer's reporting line were changed".

Senior bank figures in Dublin agreed with the assessment coming from Baltimore in relation to Mr Cronin's energy and commitment levels but continued to believe he was the best man for the job.

The report says that Mr Rusnak's supervisors, including Mr Cronin, failed to examine in any depth Mr Rusnak's positions and trades, which should have occurred as a matter of course. Also, someone should have noticed that options were supposedly expiring unexercised on the day of purchase, something that was not merely suspicious but nonsensical, according to the report.

Mr Cronin called a meeting with others, including Mr Rusnak, when concerns about him were expressed by colleagues at Allfirst. New control measures were decided on but then were not all implemented. When back-office personnel complained about bullying by Mr Rusnak, Mr Cronin called another meeting and asked treasury employees to treat each other respectfully.

Following an inquiry from AIB chief executive Mr Michael Buckley to Mr Cronin in May 2001, Mr Cronin began to focus on Mr Rusnak's activities. He sought daily reports.

"These reports clearly showed that Mr Rusnak was an extraordinarily active trader. They showed that he traded instruments with notional positions totalling hundreds of millions of dollars - and sometimes billions of dollars - each day. On some days the turnover reached nearly $4 billion [€4.5 billion\], more than 20 times the amount the treasurer told Mr Buckley was the daily turnover in response to his May 2001 inquiry."

AIB chairman Mr Lochlann Quinn said yesterday that the line of culpability "ends or stops at Mr Cronin". The main author of the AIB report, Mr Eugene Ludwig, said Mr Cronin "clearly was asleep at the switch".

Mr Buckley said Mr Cronin "just didn't do his job" and that he felt "absolutely betrayed" by him. Mr Ludwig said he had interviewed Mr Cronin for up to 10 hours and had some sympathy for him; Mr Buckley said he had no sympathy.