Trader's lawyer denies there was any theft, but admits he is trying to figure out what happened

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The lawyer representing the disgraced trader John Rusnak accused Allied Irish Banks yesterday of misrepresenting the amount of money it has lost and again said his client was not guilty of theft.

David Irwin conceded that criminal charges were likely to arise from the alleged fraud, involving $750m (£530m) in foreign exchange trades. He denied that Mr Rusnak benefited in any way.

"I think it will emerge that there is no $750m," Mr Irwin told The Independent. "I am saying there is no theft of a large amount of money. It's not a theft case, I think that will be clear. I don't think there is $750m missing through bad trades [either]."

Asked why he believed that the bank was making the claim, he said: "I don't know why they said that. [Mr Rusnak] has not benefited from this money but I don't think there is any money." He added: "I am trying to figure out what happened myself."

Directors of Ireland's largest bank have met in Dublin to discuss the implications of what was described as the biggest trading scandal since Nick Leeson sank Barings in 1995. Senior executives at the bank have said they are increasingly concerned that people other than Mr Rusnak were involved in the alleged fraud, at Allfirst Financial, a subsidiary of AIB based in Baltimore, where Mr Rusnak worked. They said there was mounting evidence of "internal and external collusion".

Before the meeting, the AIB chairman, Lochlann Quinn, said: "We know a complex fraud took place and we believe there is some considerable evidence of internal collusion, and some of external collusion.

"We have not had an event like this before. Our controls have been breached. It has happened and it should not have happened. The board has got to find out why it happened then take any action that is appropriate."

Mr Irwin, who represented the former White House secretary Linda Tripp when she became immersed in the Monica Lewinsky saga, said he and his client had met the FBI and the US Attorney's office. No arrest warrants have been issued and Mr Irwin said he had convinced the authorities that Mr Rusnak, 37, who is married and has two children, was not liable to go missing and did not need to be taken into custody as a precautionary measure.

"He is having a tough time," Mr Irwin said. "It is a little better today. When you are a pillar of the community and then all of a sudden you are an international financial terrorist ... My client is not a fugitive. We hope things take their natural course from here."

An FBI spokesman confirmed that no charges had been filed.

Pat Ryan, AIB's group treasurer, said customer deposits were safe and the bank was in good financial health. "Our capital base is very strong. It was able to absorb what happened. Their money is safe," he said.

The affair has created huge credibility problems for the bank's Dublin-based management, although chief executive Michael Buckley has said there will be no impact on his position.

Allied Irish said it had halted foreign exchange trading at Allfirst, suspended at least four executives and confirmed that the deals had been in dollar/ yen. Its finance director, Gary Kennedy, has said the bank had unwound the fraudulent positions and a bank spokesman confirmed that all the positions had now been closed.

AIB has accused Mr Rusnak, a middle-ranking dealer who earned a relatively modest salary of $85,000, of trying to disguise huge foreign exchange losses with fictitious trades. The bank said the case involved forged purchasing records for options contracts, starting early last year and ending just after Christmas.

Currency dealers normally buy options contracts to hedge their bets on whether a specific currency will gain or lose value. If they buy a currency that loses value, the bank's losses would typically be offset by an option contract bet on a movement in the opposite direction.

But in this case, the bank said Mr Rusnak did not buy options contracts to hedge many of his foreign-exchange deals. It said he forged records of options purchases, either to conceal losses or to skim the fees paid for the options.

The alleged fraud is the largest of its kind since the derivatives trader Nick Leeson brought down Barings.

In an interview with the BBC, Leeson, who was sentenced to six-and-a-half-years imprisonment, said: "I find it exceptionally frightening because I know how basic the checks were that should have been done to catch me. If they haven't been put in place, I think that is shocking."

Leeson made unauthorised futures trades that lost more than one billion dollars. He was released from a Singapore jail in 1998 for good behaviour after serving three and a half years of his sentence. He claimed he did not make a penny from his disastrous trades, which were essentially a losing bet that a group of Japanese stocks would rise.

The claim by Mr Rusnak's lawyer that his client has not profited in any way appeared to be backed by people who knew him and said his lifestyle in Baltimore was frugal. Margery Pozessky, who served with Mr Rusnak on the board of an educational charity, told the Baltimore Sun, he never appeared to have enough money to give to charity. "He seemed like a nice guy, but he was always distracted by work," she said. "At least I assumed it was work. He kept volunteering to solicit contributions from people in the banking industry but he never really came through.

"I always got the feeling that he didn't have really have the connections to people who were that high up."