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To: MileHigh who wrote (60481)	1/6/2000 11:58:00 PM
From: Ruffian	Respond to of 152472

FOCUS-Merrill robbed of $40 million by 'dead' man (adds comment from Merrill Lynch, Arab International Bank) By Dan Lalor LONDON, Jan 7 (Reuters) - U.S. investment bank Merrill Lynch & Co Inc lost $40 million in a fraud going back to 1996 that involved the use of a dead man's signature to transfer funds to a Swiss bank account, the Financial Times reported on Friday. The FT said internal Merrill documents relating to the case showed the money actually belonged to one of Merrill's clients, Egypt-based Arab International Bank, and was sent to a UBS account in Geneva in six tranches from 1996-98. A Merrill Lynch spokesman here told Reuters the broad outline of the report was correct. But he declined to confirm specific points other than the bank was AIB and that a former Merrill employee had been arrested in Egypt. As a result, Merrill was pursuing criminal and civil cases to recover securities, he said. The FT said Merrill was looking at the feasibility of trying to freeze the UBS Geneva account. For its part, AIB said it had been repaid for losses incurred as the result of ''the apparent misappropriation by a former employee of Merrill Lynch's private banking group of securities held by AIB with Merrill Lynch.'' The internal Merrill documents pinpointed problems with its internal supervision and management controls, which contributed to the alleged fraud, the FT said. Five of the six fund transfers were cleared by various innocent Merrill employees in London after being ordered in the name of another employee who died three months before the first transaction was carried out. The signature on the sixth transfer was that of an employee with insufficient authority. Sources close to the incident tried to downplay the findings, saying they were draft documents produced by junior members of staff. Merrill said it had full confidence in its controls. ''Unfortunately in this case there was a clear abuse of trust by an employee who went to great lengths to conceal his activities,'' Merrill's spokesman said. AIB said it was pleased with Merrill's response to the incident and would continue to do business with it. Merrill has informed Britain's Financial Services Authority and the New York State Banking Department, the FT said.