In his seven-year search for vindication, TDs said Eugene McErlean, a former group head of internal audit at AIB, made a credible witness when he appeared before their Oireachtas committee last week detailing what and when he told the Financial Regulator of AIB's overcharging of its customers of €65.8m.

As debate starts about replacing failed banking supervisory structures, McErlean's claims that the Financial Regulator failed to act on information with haste on overcharging information given to it as early as 2001 may have huge significance today, TDs say.

But McErlean went further, explosively telling the Oireachtas Committee on Economic Regulatory Affairs hearing on Tuesday that AIB's Goodbody Stockbrokers purposefully traded in its own AIB shares through companies based in the Caribbean and South Sea islands. This was the second time in recent years that a former AIB staff member had noted that AIB had traded its own shares through suspect territories such as Nevis and Vanuatu.

The Sunday Tribune has learned that TDs will approach the Irish stock exchange and the Financial Regulator for more details of what and when they knew of the share dealings. Separately, TD Fergus O'Dowd, a member of the Oireachtas regulatory committee, told the Sunday Tribune that he will ask questions in the Dáil, amid suggestions that the questionable share dealings went on for longer and involved a wider range of companies than has yet been disclosed.

On Thursday, the regulator issued a 125-line press release on McErlean's allegations. On Goodbody's share dealings, it said that "ultimately significant personnel changes took place in Goodbody" after AIB told it in October 2001 about the non-compliant arrangements to trade its own shares.

AIB insiders believe that McErlean, a solicitor by training and now in his late 40s, was poorly treated following the bank's investigations into rogue trader John Rusnak's $691m losses in the US in 2002 at AIB's All First Bank. After all, AIB audit insiders say that substantive powers to audit overseas units had, years earlier, been removed from internal audit based at head office in Dublin. McErlean's contemporaries and people who were aware of his work as an internal auditor speak highly of his integrity. Of course McErlean was not the first AIB senior internal auditor to have his career interrupted (see panel).

Last July, McErlean and his wife Niamh approached TDs and senators. In a letter to committee members, Niamh McErlean details her husband's struggle with the Data Protection Commissioner and the Financial Regulator to access minutes of meetings with the regulator. Their struggle raises serious and well-known concerns about the openness and efficiency of the financial regulatory system.

In July last year she wrote: "The report of the Financial Regulator published in December 2004 confirmed that the total amount of excess charging came to €34.2m. In addition, in September 2006, AIB confirmed that a further €31.6m of overcharging had been identified subsequent to the Financial Regulator's report, making a combined total of €65.8m.

"I am aware that my husband has extensive documentary evidence that the regulator knew of these abuses and did nothing about them," she wrote. "In addition, the regulator has failed to use the powers available to it between 2001 and 2004 to protect the interests of the public with respect to overcharging abuses. In other words, customers who were overcharged between 2001 and 2004 need not have been overcharged had the regulator acted appropriately."

The regulator, in its statement last week, said "it was important to distinguish between matters which Mr McErlean discussed with the bank in 2002 and subsequent foreign exchange overcharging issues".

But saying that it is important for the regulatory system to be seen to work, TD Fergus O'Dowd has told the Sunday Tribune that he will call on the Financial Regulator to reopen the overcharging investigations at AIB.

A tale of three 'highly regarded' auditors at AIB

1991: Tony Spollen, AIB group head of internal audit with responsibility for overseas units, leaves the bank. Spollen, who was well regarded by his peers, wrote an internal estimate that AIB alone faced an estimated £100m liability over its failure to collect Deposit Interest Retention Tax (Dirt). Irish banks subsequently repaid their liabilities.

1991-1997: Ian Howley, AIB group head of internal audit, was later "moved" to become head of branch and clearing operations at AIB. Asked at a subsequent Oireachtas committee why he was moved, he replied: "That would fall on others to explain. I questioned its timing, otherwise I was happy." He was well regarded by his peers.

1997-September 2002: Eugene McErlean, AIB group internal auditor, is said by staff to be "highly regarded with no fear of senior management". It is unclear how McErlean, a solicitor by training, makes a living now but he is believed to have a small AIB pension. In 2001, McErlean says he brought to AIB's attention that it was overcharging foreign exchange and other fees and that customers should be reimbursed.

March 2002: AIB advertises McErlean's job (while he was still working there) after rogue trader John Rusnak loses $691m at AIB's US unit, All First. But insiders who worked in AIB internal audit say the bank never explained how McErlean could be responsible when he did not have responsibility for All First. His departure, and what he told the Financial Regulator of the day about foreign exchange overcharging, led to his invitation last week to appear before the Oireachtas Committee on Economic Regulatory Affairs.

Summer 2001: A branch-wide AIB audit report into overcharging is sent to AIB and Central Bank.

May 2002: McErlean says he told the regulator in a meeting that AIB had failed to begin repaying customers. McErlean says he told the regulator in writing that AIB faced an overcharging liability of between €50m and €75m.

September 2002: McErlean leaves AIB.

October 2002: A second meeting is held with the regulator. The regulator subsequently says that "allegations" McErlean made at the May meeting were withdrawn.

May 2004: The existence of Faldor, an investment fund for some former AIB executives based in the British Virgin Islands, is disclosed.

Summer 2004: A whistleblower (not McErlean) reports foreign exchange overcharging to the Financial Regulator. Said to be frustrated at the lack of progress, the whistleblower then approaches the media.

December 2004: The Financial Regulator's report shows AIB overcharged its customers €34.2m.

January 2005: The Oireachtas committee conducts hearings. Financial Regulator Liam O'Reilly gives evidence and the committee publishes its report in July.

August 2005: This reporter breaks a story revealing that a second AIB whistleblower has alleged that AIB branches, on a daily basis, over 15 years, overcharged customers on foreign exchange rates and other products. Staff and former executives are urged in interviews to identify managers who allegedly encouraged the altering of FX rates. They are shown pieces of paper and asked if those named were responsible. Amid disquiet, the new investigation raises fears that junior staff will be scapegoated. "What I want to know is whether they are interviewing those executives who gave the orders," an AIB whistleblower tells this reporter.

September 2006: AIB reveals the results of this second overcharging scandal: the bank has a liability for another €31.6m, making a total of €65.8m over the two investigations. No senior staff lose their jobs and AIB starts referring to "legacy issues".

July 2008: After battling with the Data Commissioner through the circuit court for disclosure of the minutes of the meeting with the regulator in 2002, the McErlean family writes to TD Fergus O'Dowd and others seeking their help.

24 March 2009: McErlean tells the Oireachtas committee that the regulator did not act on the first claims of overcharging. He also says AIB's Goodbody Stockbrokers traded in AIB shares through companies in the Caribbean and South Sea islands.