John Rusnak, the rogue trader who cost AIB $691 million, has expressed relief that the bank and Citibank settled a 12-year-old US legal action over his fraud, just weeks before it was due to go to trial.
Speaking after a US judge dismissed the long-running litigation, Mr Rusnak said that he was “very thankful” the trial would not be going ahead.
The high-stakes case had, he said, “weighed very heavily on me because my old sins would be brought to light again.”
“I am always thankful to see reconciliation and remediation in place of continuing arguments,” he said.
“I am thankful we don’t have to dredge up these old affairs, and I am hopeful that these sins can stay in the past and we can move forward.”
The Irish bank sued Citibank for $872 million (€823 million) in 2003, a year after the fraud was detected, alleging that the US bank helped him hide his losses at its subsidiary, Allfirst.
The trial between the Dublin-based bank and Citigroup was scheduled to start on January 25th.
AIB declined to comment on the settlement. It is not thought that the scale of the settlement will require the bank to make an official stock exchange announcement.
Currency trading
Mr Rusnak, who engaged in rogue currency trading for at least five years at the Irish-owned bank in Baltimore, had refused to testify in the legal action, challenging a witness subpoena from Citibank. He wrote to US district judge
Deborah Batts
asking her to quash the subpoena, saying that he lived more than 100 miles away, which meant he could not be compelled.
She ruled last month that Mr Rusnak could not be forced to testify at trial in a decision that potentially weakened Citigroup’s defence against AIB’s accusations.
Mr Rusnak pleaded guilty to defrauding the bank in 2002 after it emerged that he had hidden currency losses for years.
He was sentenced to 7½ years in prison under a plea bargain deal, serving six years before his release in 2009.
Since then, he managed a dry cleaning business in the Baltimore area and now runs a charity called Uncuffed Ministries that helps juveniles being tried in Baltimore’s criminal courts.
AIB had alleged that Citigroup, Allfirst’s prime broker on Mr Rusnak’s trades, assisted in his fraud by engaging in bogus transactions, including hiding cash advances and falsifying trades.
