AIB has accused Citibank and Bank of America of concealing a website that would have allowed the bank's US subsidiary, Allfirst, to gain access to John Rusnak's fraudulent trading that cost it Eur 691 million.
In documents lodged in a New York Federal Court Ireland's biggest bank claims that Allfirst's management could have settled several issues surrounding its rogue trader's activities if it had been consulting a designated client website hosted by the two banks.
It states that Rusnak told Bank of America: "I don't want my back office to have access to the website or any of the trade details." AIB claims that the bank replied: "Completely."
AIB is pursuing an action against Citibank and Bank of America for their roles in facilitating the unauthorised currency trading by one of its traders in Baltimore.
It accuses them of helping to undermine controls at Allfirst. It also alleges they altered trade confirmations to cover up fake trades.
The banks have dismissed the claim. A spokeswoman for Citigroup, the New York-based parent of Citibank, said: "We believe the suit is without merit." Bank of America has refused to comment.
AIB is suing both institutions for $500 million (€424.4 million) in damages for their part in assisting Mr Rusnak to conceal his losses. Rusnak is serving 7½ years in prison for fraud. AIB has said it will not make any comment on the case.
It claims it might have uncovered the fraud at least one year earlier had the two banks had not backed Rusnak's fraudulent trades. The fraud was perpetrated over a five-year period.
In the complaint the bank says: "Since the trades were fictitious, Rusnak was concerned that his entire scheme would be revealed. Rusnak asked B of A and Citibank for their assistance in overcoming this threat and they each agreed."
AIB is also alleging that the two banks, which acted as prime brokers, carried out more "irregular transactions" to put the back office off the scent. "They took instruction from him concerning what confirmations to send and how to format them".
Rusnak's main contacts at B of A were Mr Umran Zia, a managing director in the bank's foreign exchange prime brokerage division, and Mr John Mierzejewski, a back office manager.
His main contact at the bank was Mr Richard Marra. He and another colleague were dismissed after the fraud was disclosed for "incurring improper entertainment expenses".
Rusnak had demanded that the banks get his "tailored" daily trade record sent to him, even though he could get the same information on the B of A website.
"I understand I can download the info from website, but, as Umran may have told you, I don't want my back office to have access to the website or any of the trade details," according to the documents.
Some investors have filed class actions against AIB in the US seeking damages for the loss in the value of their shares due to the fraud. The bank has already ruled out taking any action against its auditors PricewaterhouseCoopers for its failure to spot the fraud admitting that it was down to poor management.
