Three AIB executives disciplined over tax issues

Disciplinary action has been taken against three AIB executives who had "tax issues" relating to offshore accounts.

The bank refused yesterday to expand on the matter, saying a further statement would be issued in time by the Irish Financial Services Regulatory Authority (IFSRA).

It is not known if the disciplinary action included dismissal. The disciplinary action arises from the bank's inquiry into what it has called the Faldor matter.

Last year the bank discovered that a number of senior AIB executives in the early 1990s had an investment account with AIB investment managers by way of a British Virgin Islands company called Faldor Ltd.

The bank's inquiry revealed that five other senior executives, three of whom were still with the bank, had tax issues relating to other offshore accounts. These later accounts concerned a period up to 1998 and the individuals involved are understood to have operated at a much lower level than the individuals associated with the Faldor account.

The chairman of AIB, Mr Dermot Gleeson, yesterday told the Oireachtas Joint Committee on Finance and the Public Service that disciplinary action has been taken in respect of persons still in the bank's employment at the time of the Faldor-related inquiries.

In an opening address to the committee, Mr Gleeson dealt with a number of matters including the issuing of €26.1 million in refunds arising from foreign exchange charges imposed over an eight-year period that were greater than those notified to the regulator.

He said he wanted again to say that AIB was sorry for the "serious lapse in our responsibilities towards our regulator in relation to foreign exchange charges". During the period the bank imposed charges greater than those it had notified to the regulator. The rates imposed were those advertised to the bank's customers. Mr Gleeson said the bank was not obliged to return the monies which were in excess of the notified rates but had chosen to do so. The bank had so far identified 1.1 million transactions eligible for refunds, and about 173,000 accounts.

"We've repaid about €12.7 million of €26.1 million," he said. "About a third of the repayments are under €10; two thirds are under €20; 96 per cent are under €250." The programme of identifying customers is continuing. The bank is repaying the money with interest.

Following its review of the foreign exchange issue, the bank conducted a review of all its other retail products going back eight years. Discrepancies which showed it owed €8.1 million to customers were discovered.

The bank's investigations "did not uncover a culture of overcharging", he said.