AIB has written to 152 individual clients who are to share €330,000 in compensation and interest after losing out as a result of Faldor, the bank's offshore investment vehicle that is the subject of three investigations.
AIB Investment Managers (AIBIM) managed Faldor between 1989 and 1996. Five of its senior executives had a total of €750,000 invested in the British Virgin Islands-based company.
The bank last week admitted that Faldor's activities breached tax law. As a consequence of what the bank described as "unacceptable deal allocation practices" that favoured Faldor, two specialist investment trusts that were AIBIM clients lost out by a total of €174,000. They are also due €156,000 in interest.
AIB said yesterday it had written to the clients involved detailing the losses and the compensation due. A spokeswoman told The Irish Times the individual amounts involved were small.
Investors in Faldor included former AIB chief executive, Mr Gerry Scanlan, and Mr Roy Douglas, who is due to step down as chairman of mortgage lender Irish Life & Permanent this week. Both men said they had no knowledge that the investment had been made in the company on their behalf. The other executives linked to Faldor were former deputy chief executive, Mr Patrick Dowling, former director of strategy, Mr Diarmuid Moore, and Mr David Cronin, former head of AIB's US treasury operations, which were embroiled in a fraud scandal in 2002.
Former chief executive Mr Tom Mulcahy was one of another five executives discovered to have "tax issues" as a result of a scheme that was not connected to Faldor. He resigned as chairman of Aer Lingus last Saturday. Three existing executives are facing disciplinary action as a consequence of their involvement with the second scheme.
Former Central Bank chief executive, Mr Maurice Hurley, the Revenue Commissioner and the Office of the Director of Corporate Enforcement (ODCE) are investigating the AIBIM-Faldor scheme. This comes in addition to an Irish Financial Services Regulatory Authority (IFSRA) and internal AIB investigation into overcharging on non-cash foreign exchange transactions worth more than €635 at the bank between 1994 and 2004.
Those investigations are due to be completed by the middle of this month. However, neither the bank nor IFSRA could say yesterday if they would be delayed by subsequent revelations surrounding the bank's activities. It also emerged this week that some branches had increased charges to boost profits during the 1990s.
