In 2001, Eugene McErlean was working for the giant Allied Irish Banks (AIB) as an internal auditor. He discovered that his employer had been overcharging customers for exchanges from foreign currencies. In over 3 million transactions, AIB had run up overcharges now valued at over €34 million ($47 million). McErlean reported his findings and his superiors seemed to share his concern, but nothing happened. Then he went to Irish regulators with a report about his concern. The regulators did nothing, but in 2002 his boss insisted that he retract all his allegations. He refused and soon found himself looking for a new job. In 2004, the overcharges became a national scandal. Now AIB has set aside €50 million ($69 million) to cover the cost of refunds.
Last year, outgoing AIB boss Eugene Sheehy apologized to McErlean. According to the Irish Independent, Sheehy told a provincial House committee that McErlean, "undertook the role of auditor in a highly professional, competent and effective manner. Eugene was not dismissed by AIB." McErlean was gracious in accepting the apology, and indicated that he was more concerned with the failure of Irish regulators to respond to his 2001 concerns. As the Independent stated last year, "The discredited watchdog would now be better off following Sheehy’s example and emerging from the Dame Street bunker waving the white flag."
A year later, that watchdog is now waving that white flag. Today’s Independent is reporting that Financial Regulator Matthew Elderfield will testify tomorrow to Ireland’s parliament (called the Oireachtas) and convey his agency’s apology for its past mistreatment of McErlean and his concerns. Elderfield called McErlean yesterday to convey his apology yesterday.
I can add two postscripts. Wikipedia is still reporting that to this day, AIB has not disciplined anyone for knowingly making the illegal overcharges. The overcharges were made for eight years, and various managers knew about them while there were going on. Also, since this scandal erupted, AIB purchased a large share of M&T Bank of Buffalo, New York.