customers got their first public airing yesterday.

The bank says Mr. Arnold Todd, its former personal banking manager, used shady loan deals to pocket huge sums of cash.

But up to now, details of the alleged fraud have only been discussed in closed-door legal proceedings.

Yesterday's hearing was before three Appeal Court judges, who are being asked to decide how much, if any, of Mr. Todd's assets should be frozen.

The bank wants $6 million frozen, in case Mr. Todd shifts it overseas or hides it.

But Mr. Todd is asking for his assets to be completely unfrozen.

Mr. Geoffrey Bell, lawyer for the bank, told the court it was claiming $7.1 million from its former employee.

Mr. Todd completed personal loan application forms containing false information and entered into transactions in which he had a personal interest, Mr. Bell said.

He got people to sign blank application forms and then filled in false information so it appeared they could qualify for loans, he added.

Mr. Todd also made loans to a group with which he was involved in real estate business, Mr. Bell said.

"The bank is alleging that Mr. Todd has engaged in widespread criminal activity,'' he said.

Since December, 1990, when rumours about Mr. Todd's actions led to his suspension, an enormous investigation had been carried out by the bank.

In Feburary, 1991, Mr. Todd had resigned during questioning by bank officials.

Countless customers had been interviewed, and man-hours spent on the task had become man-years.

Police had also launched a fraud inquiry, he said. The bank still did not know how much it might lose.

Mr. Bell asked that an injunction granted a year ago, freezing $6 million of Mr. Todd's assets, be restored. It was reduced to $3 million last spring.

Mr. John Riihiluoma, for Todd, reminded the court that a judge once referred to this type of injunction as a "nuclear weapon of the law''. It could be a devastating and draconian action, he said.

It had only been imposed because the bank had been panicked by rumours that Mr. Todd was about to flee to Capri. These rumours had been false.

He criticised the procedure carried out by Puisne Judge the Hon. Mr. Justice Ward in granting the injunction, and the length of time taken by the bank in its action.

Todd had been unemployed since his resignation, he said.

The court heard that Mr. Todd also faces legal actions from customers. One, contractor Mr. Delmont Talbot, is suing him for about $1 million, judges were told.

Todd, a former deputy chairman of the United Bermuda Party, was believed to have been the highest-ranking black executive at the Island's biggest bank.

A former chairman of the board of governors at Berkeley, He has also been a member of the Board of Education and the Tourism Board.

The hearing continues.