Ludwig report 'will be silent on inside help'

The internal inquiry into rogue trader Mr John Rusnak will not reveal if he had inside help as he lost €788 million from AIB’s subsidiary Allfirst, it was claimed today.

A joint meeting of the boards of AIB and its US subsidiary Allfirst is discussing the report by Mr Eugene Ludwig into the five-year fraud at the subsidiary.

Mr Ludwig was appointed to investigate the trading fraud immediately after the losses were announced. The 54-year-old banker is regarded as one of America's top financial regulators.

Mr Michael Buckley

The report was supposed to discover if Mr Rusnak had any help inside or outside the Baltimore-based bank where he traded in foreign currency.

But today a source close to the investigation told the New York Timesthe report into the inquiry will not provide answers to whether Mr Rusnak acted alone or not.

The report does reveal chief executive, Mr Michael Buckley, was told last May of big currency trades at Allfirst.

Mr Rusnak's name was not mentioned, and Mr Buckley spoke to an Allfirst executive but after reassurances did not pursue the matter, the source told the New York Times.

Neither Mr Rusnak, whose lawyer denies he stole any cash from the bank, nor the bank's accountant, Pricewaterhouse Coopers, were asked to help the internal inquiry, although investigations by the FBI and the American Federal Reserve are under way.

Allfirst executives claim Mr Rusnak had been helped for five years to hide his losses. Four former colleagues of Mr Rusnak's were suspended immediately following the announcement of the losses by Mr Buckley on February 6th, 2002.

Mr Buckley denied having any prior knowledge of the fraud - a statement to which the bank remains committed.

Mr Ludwig’s report will form the basis for deciding where responsibilities lie so the board can decided should anyone be asked to step down. It will also indicate whether executives in the Republic should share some of blame with Allfirst officials in the US. So far, only Mr Rusnak has left the bank.

An edited summary of Mr Ludwig's report is expected to be revealed tomorrow, although a statement from the bank carrying its response could be issued as early as this evening.

The Irish Timesyesterday cited sources claiming that as Mr Rusnak's gross trading figures at Allfirst last year mounted almost daily until they reached $225 billion, they were regularly reported to senior Allfirst executives at a fraction of their true value.

The Labour Party today called for AIB officials to be called before the Dáil to explain the €788 million loss.

"What executives did or did not know about the rogue trading at an AIB subsidiary is obviously a source of concern," Labour Party finance spokesman Mr Derek McDowell said.

Additional reporting PA