Allied Irish Bank (AIB) is facing mounting legal costs in its pursuit of two of the world’s largest banks for allegedly assisting the rogue trader John Rusnak. The Irish bank's dispute in the New York courts has now entered its eighth year.
AIB sued Citibank and Bank of America for $480m of the $691m in losses, alleging that the two U.S. banks knew about Rusnak’s currency trades long before he was detected in 2002.
On January 17, 2003 Rusnack was sentenced to 7 and a half years in prison for hiding $691 million in losses at the bank, after bad bets snowballed in one of the largest ever cases of bank fraud.
The case against the two U.S. banks, which began in 2003, is rapidly becoming the most expensive litigation case Ireland has ever seen.
Documents filed in Manhattan’s Pearl Street court show that the dispute has already generated four million pages of documents and testimony and involves work performed by some of the most expensive law firms in the world.
Citi and Bank of America have counter-sued AIB, appearing to reverse an early legal success by AIB’s New York counsel in 2006, prizing all but a remaining handful of disputed documents from AIB, court records reveal.
The documents also show that Citi and Bank of America continue to defend the lawsuit relentlessly. Citi, mounting a vigorous defense, has engaged some of the world’s costliest lawyers from Cleary Gottlieb Steen and Hamilton. Meanwhile AIB has engaged the high-profile American law firm Cooley Godward Kronish, who have vowed to prosecute the case vigorously.
An AIB spokesman told the press this week that the bank did not break out the costs of its litigation.