Lawyers for Allied Irish Banks have told the High Court that senior bank executives strongly refute allegations by another executive, Séamus Sheerin, that he is being scapegoated over the foreign exchange overcharging scandal in the Bank.

The court heard that Aidan McKeon, AIB director and now managing director of AIB group UK, entirely rejected claims by Mr Sheerin, former general manager of AIB's strategic development unit, that Mr McKeon had instigated the overcharging measures.

Mr McKeon conducted a disciplinary hearing into allegations against Mr Sheerin, which concluded with a recommendation that Mr Sheerin be dismissed.

Mr McKeon was not the subject of recommended disciplinary proceedings following an investigation into the overcharging issue, the bank's law agent said in an affidavit yesterday. All of the substantive and procedural allegations made against Mr McKeon by Mr Sheerin were rejected and Mr McKeon had no unresolved issues in the matter. The only mention of Mr McKeon in a Deloitte and Touche report into the overcharging issue was as a person interviewed in the course of their work.

Donal Forde, the present managing director of AIB in the Republic, was also "outraged" by the claims made against him, which were already examined and rejected during AIB's own investigation process into the overcharging issue, the bank's law agent said in an affidavit. Mr Forde had said he was never informed by Mr Sheerin of the foreign exchange notification discrepancy.

After Maurice Collins SC, for AIB, told the court yesterday there would be no alteration in Mr Sheerin's position prior to April 4th next, Mr Justice O'Sullivan decided there was no need to continue an interim order granted to Mr Sheerin last Friday restraining his dismissal.

The judge adjourned the proceedings by Mr Sheerin against AIB to April 4th next. Mr Collins indicated the sides may apply before that date to the president of the High Court for an early hearing of Mr Sheerin's application for an interlocutory order against the bank, which order would maintain the status quo pending the outcome of the full proceedings. He said he wanted to note, as a matter of fairness but not as a comment on the merits of the case, that the bank rejected the allegations.

The proceedings arose after Mr Sheerin last Friday secured, on an ex parte basis, an interim order restraining his dismissal as general manager of the strategic development unit. Mr Sheerin claimed he was being "scapegoated" for overcharging by the bank of its customers.

In an affidavit, Mr Sheerin (41), who has been suspended since May 2004, said he was told in a letter last week that he should be dismissed with immediate effect. The letter also referred to his having a right of appeal.

He claimed in 2002 that he had simply "inherited" the problem of overcharging in connection with foreign exchange transactions, which problem dated back to 1995 and, in circumstances where he, in liaison with others, was engaged in managing it, it was "utterly perverse" that he be subjected to any sanction at all.

He said he had informed his superiors of the approach that he thought was appropriate and at no stage did anyone suggest an alternative or criticise his approach.

He said he was forced in May 2004 to take leave from the bank. Later, AIB had directed that Mr McKeon should inquire into the alleged wrongdoing charged against Mr Sheerin and it was Mr McKeon who ultimately decided that Mr Sheerin should be dismissed. Mr Sheerin said this occurred in circumstances where Mr McKeon himself was the subject of unresolved issues in relation to foreign exchange transactions.

He believed he was being excluded from employment to facilitate others to ensure that he was being scapegoated and held responsible for the problem.

When the case returned to court yesterday, Mr Justice O'Sullivan was told the bank was not in a position yesterday to deal with an interlocutory application and wanted that matter adjourned to allow it file replying affidavits. In the meantime, Mr Collins asked that the court should not continue the interim order in circumstances where, he argued, it had never been necessary.

Roddy Horan SC, for Mr Sheerin, said he had sought the interim order after his client was facing summary dismissal after a flawed disciplinary process.

Mr Collins said he could assure the court there was no question of anything happening to Mr Sheerin until April 4th at the earliest. When Mr Sheerin received a letter from Mr McKeon on March 9th last indicating the recommendation he should be dismissed, the letter also informed him of his appeal rights under the bank's disciplinary procedures, which rights remained until April 4th.

If Mr Sheerin appealed and lost that appeal, then he had a further right of appeal before an independent person agreed between the Bank and the Irish Bank Officials Association, counsel added.

Because of the procedure adopted by Mr Sheerin, a great deal of information was put into the public domain in circumstances that precluded the bank from answering the charges made, counsel said. Mr Sheerin had made very serious claims against a number of senior officials which were without foundation, counsel added.

Counsel said that, in June 2004, AIB, with the approval of the financial regulatory authority, Ifsra, had appointed Deloitte & Touche to investigate what had occurred. Mr Sheerin was given an opportunity to make submissions to Deloitte & Touche and did so.

Mr Collins said AIB then established a subcommittee to look into the Deloitte findings to see if disciplinary procedures were warranted. In September 2004, the committee said Mr Sheerin had four charges to answer, all of which related to when he was manager of the strategic development unit between 2002 and 2004.

Mr McKeon was appointed to investigate the charges against Mr Sheerin. Mr Sheerin had made submissions to Mr McKeon. On March 9th last, Mr McKeon had concluded that Mr Sheerin should be dismissed and had informed him of that by letter. In circumstances where there remained a right of appeal, it was not appropriate for Mr Sheerin to seek the intervention of the High Court.

Mr Horan argued his client faced immediate dismissal from last Wednesday and that the procedures adopted breached the requirements of natural justice. He said a fundamental problem with the procedure was that Mr McKeon was the person who in 1996 instigated the overcharging scheme at the centre of this scandal and that Mr McKeon was the person appointed to investigate Mr Sheerin. Mr Horan agreed that Mr Sheerin had participated in the procedure and had not objected to Mr McKeon conducting it.

Mr Horan argued this was not a bona fide termination of employment. In this enormous organisation, Mr Sheerin was the only person whose employment was being terminated.

In an affidavit, the AIB group law agent said the bank needed time to respond to Mr Sheerin's application for an interlocutory order and would be strenuously resisting it. The bank was satisfied there was no substance whatever to Mr Sheerin's complaints.