The allegations against Chiarello - that he solicited favours from third party vendors and used his influence over IT spending to win investment banking mandates for his firm - surfaced after the New York Post reported that it had gained access to internal documents and e-mails related to the case, which has been bubbling under at the investment banking firm since late 2005. Morgan Stanley has dismissed the claims made by Riel as "baseless".

Riel was fired in September, four months after a Florida jury ordered Morgan Stanley to pay $1.57 billion in a dispute with billionaire Ronald Perelman. The firm's delays in producing e-mail during the trial contributed to the hefty damages awarded.

The $10 million wrongful dismissal suit, filed in late December, alleges that Riel was terminated for uncovering improper business practices that included the destruction of e-mail.

"Because Mr. Riel reported improper solicitations and conflicts of interest at Morgan Stanley; because he reported the ongoing and unlawful destruction of email; and because he would not alter the facts to hide Morgan Stanley's wrongful conduct in the midst of a high-profile litigation, Morgan Stanley retaliated against Mr. Riel and terminated his employment," the complaint says.

According to the Post, Riel's suit alleges that Chiarello garnered prime sports tickets for himself and his family, organised vendors to install sophisticated electronics in his home, and used Morgan's IT budget to help his firm win investment banking deals.

The paper quotes from an e-mail purporting to have been sent to Chiarello in January, 2002, by Crawford Jamieson, head of Morgan Stanley's technology banking unit in Asia. Jamieson was allegedly complaining that contracts promised to Indian outsourcing firm Wipro had not been delivered. He is quoted as having e-mailed that 'our competitors are throwing work at....Indian outsourcing in exchanging for IBD business'.

A spokesperson from Morgan Stanley has said that the firm had looked into Riel's allegations, and had found no evidence to substantiate the allegations. Morgan says that Riel was fired for violating rules about employee privacy.