Byline: Heller, Michele

Allied Irish Banks PLC has hired former Comptroller of the Currency Eugene A. Ludwig to investigate $ 750 million of foreign exchange losses that the company has blamed on employee fraud at its Baltimore subsidiary, Allfirst Bank.

Mr. Ludwig, the managing partner of Promontory Financial Group, a consulting firm based here, will lead an inquiry into how Allfirst's internal controls failed to detect the losses and will recommend improvements in a report due to the parent company's board by mid-March.

The internal probe will center on John Rusnak, the trader Allfirst has accused of falsifying option contracts over the past year to conceal losses from trading dollars and yen. Mr. Rusnak has denied committing fraud for personal gain, according to news reports.

"Management wants an independent, outside authority to direct the investigation, and that's the right way to do it," Mr. Ludwig, who was the comptroller from 1993 to 1998 and then a vice chairman of Bankers Trust Co., said through a spokeswoman. "They've asked us to establish exactly what happened so that it never happens again."

Among other actions, Allied Irish Banks suspended five Allfirst executives, including Mr. Rusnak, on Wednesday and took control of the bank's currency operations the next day.

Copyright c 2002 Thomson Media. All Rights Reserved.