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To: MeDroogies who wrote (95127)	2/6/2002 10:33:38 AM
From: Night Writer	Read Replies (2) \| Respond to of 97611

No accounting for human nature, Allied case shows By Sudip Kar-Gupta LONDON, Feb 6 (Reuters) - Suspected fraud at Allied Irish Banks Plc showed on Wednesday that despite years of hand-wringing and tightening legislation since the collapse of Barings bank, firms are as vulnerable as ever to human frailty. "At the end of the day, humans are humans," said Commerzbank strategist Michael O'Sullivan. "You will always have greed and hubris.... It's hard to regulate against that," he added. Tougher industry regulation has been introduced since rogue dealer Nick Leeson brought down blue-blooded British bank Barings with huge unauthorised trades seven years ago. But many industry experts take the view that the problems at Allied Irish <ALBK.L><ALBK.I> -- reeling from a $750 million case of suspected fraud by one of its U.S. traders -- show it is impossible to regulate for human nature. Ireland's largest bank by market value said on Wednesday it suspected a trader at its U.S. subsidiary Allfirst Financial Inc had entered fictitious foreign exchange trades into its books. The allegation of shady trading on the world's financial markets echoed the 1995 collapse of Barings, after Singapore-based trader Leeson ran up $1 billion in losses. The Leeson scandal prompted Britain to give more power to its financial watchdog, the Financial Services Authority. But analysts said the case of Allied Irish, which has called in the U.S. Federal Bureau of Investigation to track the forex trader under suspicion, showed regulatory powers could still not prevent bankers from falling victim to greed and corruption. "Banks deal with money, so the temptation will always be there," said Peter Uglow, a partner at Focus Training, a British firm that helps companies fight fraud. The Allied Irish saga is not the first one to have hit the British and Irish banking sectors during the post-Leeson era. In 1999, top investment bank Credit Suisse First Boston came under fire after a flamboyant group of young traders at the firm -- known as the "Flaming Ferraris" after their favourite cocktail drink -- were found to have carried out illegal trades. CSFB acted swiftly to fire the traders involved, which included the socialite son of disgraced British politician Jeffrey Archer. FIGHTING FRAUDSTERS The Allied Irish investigation comes as public perception over the integrity of financial markets has foundered in the wake of the Enron <ENRNQ.PK> bankruptcy scandal, which raised questions over accounting procedures. America's biggest-ever bankruptcy rocked financial markets, and analysts suggested that Allied Irish might have discovered the suspect trades because "Enrongate" had raised the stakes in terms of tougher internal and external corporate regulation. Some firms are looking to hire outside companies to teach them how to be corporate detectives. Focus Training was set up in 1997 and former policemen dominate its workforce. Uglow, himself an ex-policeman, said business had been booming and added that one of the company's major contracts was with British bank Abbey National Plc. Some banking analysts felt the Allied Irish case was more of a reflection on the state of controls at Ireland's largest bank rather than an indictment of the sector as a whole. Ratings agency Fitch, while saying the disclosures had not changed its view on Allied Irish, pointed out that they raised "issues of management oversight, risk management systems and controls." Many analysts agreed the incident would lead to boardroom bankers keeping an even closer eye on the foot-soldiers of the trading floor, but added there would always be cheats. "People have always been stealing from the hand that feeds them. In this day and age, it's just become a bit more sophisticated," said Uglow. --additional reporting by William Kemble-Diaz and Jane Merriman ((London newsroom, +44 20 7542 4020, fax +44 20 7583 3769, sudip.kargupta@reuters.com)) For main story on Allied Irish Bank, see [nL06120330]. REUTERS