SACKINGS: Mr John Rusnak's $691 million (€783 million) fraud at Allfirst went undetected due to an "unholy" dynamic with the bank's head of treasury, the US banker who investigated the losses said yesterday.

Referring to Mr Rusnak's relationship with the head of treasury, Mr David Cronin, Mr Eugene Ludwig said no evidence of complicity had emerged.

While "lurid details" would be uncovered as investigations by the FBI and other bodies continued, the losses were attributed to the failure of Allfirst's internal controls and the falsification of records.

"It would have been so much easier if we had found complicity with someone involved higher up in the organisation," said Mr Ludwig. "In a sense there was a human dynamic here that was unholy."

The report noted that Mr Cronin believed Mr Rusnak was "fundamentally" a person of good character.

It said: "Mr Rusnak regularly attended church with, and participated on the parish school board, with Mr Cronin. They both live in the same town."

A former comptroller of the US currency, Mr Ludwig was hired by AIB last month after Mr Rusnak's losses - built up since 1997 - were uncovered.

At a press conference yesterday, AIB chairman Mr Lochlann Quinn said he "wouldn't be particularly optimistic" that "any quantum" of the money lost could be recovered.

Mr Cronin was one of six Allfirst executives sacked by AIB on Wednesday. The bank also fired Mr Jan Palmer, Mr Bob Ray, Mr Lawrence Smith, Mr Michael Husich and Mr Lou Slifker.

While the retirement of two senior bank officials was also announced, attention throughout yesterday's press conference was directed at Mr Cronin's role in the affair.

The bank suggested that culpability stopped with Mr Cronin, who was Mr Rusnak's boss.

Mr Ludwig said he had "some sympathy" with Mr Cronin but said people working at the highest levels in Allfirst "didn't do their job very well. Having that happen in your life is a shocker," he said.

Mr Ludwig spoke with an associate, Mr Duncan Hennes, at the press conference. He said the 57-page report "gets a feeling" for the fraud executed by Mr Rusnak.

While he had not been able to produce answers to a number of important questions, he said the findings were "complete as to the fundamentals of the story". Calling for additional investigative work, he added: "I don't believe that those additional efforts will change the story fundamentally."

Mr Ludwig said he had been unable to interview Mr Rusnak. He believed that was normal because Mr Rusnak was dealing with an investigation by the FBI.

Neither did Mr Ludwig carry out investigations in other banks who had dealt with Mr Rusnak. Mr Quinn said: "Mr Ludwig had no right or authority to land into any other institution and ask them what was going on."

On the losses incurred by Mr Rusnak, Mr Hennes said: "Most of the money was simply lost to the market. It was a bad bet. Is there a possibility that he took some of the money? Yes, there is that possibility there. He didn't did have a lavish lifestyle."

Mr Hennes said Mr Rusnak had very cleverly circumvented the internal systems at Allfirst through the use of false option assets on the foreign exchange markets. He manipulated the bank's system to hide the losses and took advantage of the fact that his trades "did not receive the careful scrutiny that they deserved".

With about half the losses incurred in 2001 and early this year, Mr Hennes said that Mr Cronin became "more and more nervous".

He added: "There were tonnes and tonnes of trades that I've never seen before and that had absolutely no economic substance."