* US firm took 3.2 mln eur in unjustified fees
* State Street reported to watchdog in UK
* Ireland been repaid says finmin
DUBLIN, Nov 22 (Reuters) - Ireland's national debt agency has accused U.S. financial services firm State Street Corp of fraud for overcharging the country's pension fund during a transaction last year.
State Street has admitted overcharging the debt agency by 3.2 million euros ($4.1 million) after it was hired to manage the sale of 4.7 billion euros of assets to fund the recapitalisation of Ireland's banks.
The error was reported by Ireland's Comptroller and Auditor General last month.
The head of the National Treasury Management Agency (NTMA) John Corrigan told a parliamentary committee on Thursday that the mistake was fraudulent. He said he had reported the matter to the Irish police and had told the UK regulator, the Financial Services Authority (FSA).
"What happened here was fraudulent in nature and it's totally unacceptable," he said. "We have communicated this view ... very clearly and in unequivocal terms to State Street."
State Street said in a statement that "certain employees failed to comply with the high standards of conduct, communication and transparency that we expect," adding that those individuals no longer worked for the firm.
Corrigan said he had met with the vice president of State Street to discuss the issue.
"Fraudulently, in my view, within State Street there was 0.7 percent chipped off the sale price that they got when they went out onto the open market," during the sale of the assets, Corrigan said.
Ireland's finance minister Michael Noonan said he had every confidence in the NTMA and that Corrigan was right to reveal to the public that something untoward had happened.
"I understand that everything which was misappropriated has been repaid so there is no loss to the state," Noonan said.