PRESS CONFERENCE: Chief executive Michael Buckley attributes the failure to discover the fraud until it was in its sixth year to "misplaced" trust in managers

The passivity of managers responsible for monitoring foreign exchange trades at Allfirst was akin to collusion in fraud, AIB claimed yesterday.

At a press conference publishing the report of US banker Eugene Ludwig into the $691 million (€783 million) fraud at Allfirst, AIB said examination of the "appalling detail" in the affair had uncovered no evidence of internal collusion with the trader Mr John Rusnak.

There had, however, been a serious breakdown in the bank's internal controls which enabled the "principal culprit", Mr Rusnak, to run up massive losses.

While the control system at Allfirst was not state-of-the-art, AIB's chairman Mr Lochlann Quinn said the process was not implemented. Mr Quinn and the AIB chief executive, Mr Michael Buckley, attributed the failure to discover the fraud until it was in its sixth year to "misplaced" trust in managers. It was necessary to re-examine the control environment in the bank, they said.

Mr Quinn said: "I have described it to people as the equivalent of collusion by incompetence."

The description was repeated by Mr Buckley, who said the passivity of managers was "as good or as bad" as collusion.

Stating that those "culpable" must be held to account, AIB moved on Wednesday night to dismiss six senior Allfirst executives who were "directly responsible for oversight" or "should have been aware" of the fraud.

The six included Allfirst's executive vice-president and treasurer, Mr David Cronin, who was severely criticised at the briefing yesterday.

"He clearly was asleep at the switch," said Mr Ludwig, who was hired last month to investigate the fraud.

Mr Quinn said: "Nothing came to Michael Buckley and the reason Mr Cronin is no longer working for us is because of this ... The fulcrum of where the whole system broke down was with Mr Cronin."

Evidence of very very unusual trades had emerged and the volume of those trades had been misrepresented, Mr Buckley said. "I feel absolutely betrayed by somebody in a position in whom the bank had a lot of trust."

Mr Quinn and Mr Buckley offered to resign to a meeting of the AIB board on Tuesday, but they were asked to stay on by their co-directors after the meeting continued in their absence.

Mr Buckley said his resignation offer was not an attempt at "grandstanding" but a reflection of accountability.

Mr Quinn said he had been chairman of the bank for five-and-a-half years and had a responsibility to ensure the quality of management at the bank.

The board's general view was that less damage would be done to the bank if he stayed. "I hope they are correct," he said. Referring to the fraud, he added: "I don't feel good about this. I don't think anyone does."

Mr Buckley and Mr Quinn defended the board's decision to keep Allfirst chief executive, Ms Susan Keating, in the job. Appointed 18 months before the fraud emerged, Ms Keating had been in charge of treasury for less than a year.

"The fact that she hasn't gone indicates that culpability does not travel," said Mr Quinn.

Mr Ludwig added: "She herself was concerned about Mr Cronin's lack of energy in the job. The facts are the facts. It's certainly a responsible decision of the board in this case not to take her out."

This comment prompted questions of Mr Buckley who had said earlier that "nobody ever expressed any concerns about David Cronin's competency". He responded: "The issues had to do with management style rather than competence as a treasury manager."

Mr Buckley was also asked about a report in The Irish Times which said that he had been informed last year that Mr Rusnak was moving markets. He said: "There were many many mis-statements and innuendos contained in those reports which I believe the person who wrote them should regret."

Mr Quinn declined to explain why television cameras were excluded from all but the initial part of the press conference. Such action was appropriate, he said.

On suggestions that a merger between AIB and Bank of Ireland could stave off a takeover of either institution by a larger international group, Mr Quinn said he favoured the retention of two large independent Irish-owned banks in the market.

Mr Quinn said "yeah" when asked if he was satisfied that AIB's auditors, PricewaterhouseCoopers (PwC), were doing a "decent job".

He did not know the extent of consultancy work carried out by PwC for AIB. Mr Buckley added: "It's not the responsibility of auditors to disclose fraud."