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France

'Rogue trader' Jérôme Kerviel says bosses encouraged risks

Text by News Wires

Latest update : 2010-06-09

French trader Jérôme Kerviel, on trial in Paris Tuesday for allegedly gambling away almost five billion euros whilst an employee at Société Générale, has testified that his superiors "encouraged" him to take risks.

AFP - French trader Jerome Kerviel testified on Tuesday that he was "encouraged" by his bosses to take risks, on the first day of his trial over the multi-billion-euro trading scandal at Societe Generale.
  
The former trader is accused of gambling away 4.9 billion euros (six billion dollars) in risky stock market trades and of hiding these actions from his employers at Societe Generale, one of France's three big banks.
  
Dressed in a dark suit and purple tie, Kerviel answered questions from presiding judge Dominique Pauthe who pointed to psychological assessments showing a "lack of self-control" that led to his risky behaviour.
  
Kerviel however responded that his bosses' attitude had played a role.
  
"The daily encouragement from my superiors did not stop me. Rather they encouraged me to continue," the 33-year-old told the Paris court.
  
Kerviel risks a maximum sentence of five years in prison and a fine of 375,000 euros if convicted on charges of breach of trust, falsifying and using fake documents and entering false data into company computers.

The court must decide whether he is solely responsible for the losses in a case seen as a symbol of the banking excesses blamed for the financial crisis.
  
Branded a crook by his ex-employer but viewed by others as a scapegoat for those higher up, Kerviel faces criminal charges along with civil suits by the bank and other plaintiffs, including employees and shareholders.
  
Societe Generale revealed in January 2008 that it had been forced to unwind 50 billion euros of unauthorised deals it says Kerviel made.
  
He denies being solely responsible and is seeking an aquittal from the Palais de Justice criminal courts in central Paris after a two-year inquiry.
  
Kerviel looked tense and solemn as he stood before the judges at the start of the trial and identified himself as a "single, computer consultant" earning 2,300 euros per month.
  
He later spoke of the stressful long days working at Societe Generale.
  
"Every day I would arrive at 7 a.m. Lunch would be a sandwich at my desk," he said.
  
Kerviel has said he made mistakes but maintains his bosses knew what he was doing and that he was part of a "big banking orgy," as he described it in a memoir published last month.
  
He wrote that traders habitually hid the size of their bets and bosses turned a blind eye to possible breaches of trading limits as long as earnings were high.
  


Kerviel told AFP last month that the trial was a chance "to show the public that I was not an isolated case and there were abuses throughout the banking and trading world."
  
About 40 witnesses will be called to the stand over the coming weeks including Eric Cordelle, who was Kerviel's immediate superior at the time. He is due to testify on June 21.
  
"My aim is to show that at no point did Jerome Kerviel abuse the confidence of the bank," said his lawyer Olivier Metzner ahead of the trial, vowing to present evidence recovered from trading computers to prove that Societe Generale was aware of Kerviel's actions.
  
The bank's lawyer Jean Veil on the other hand has accused Kerviel of "duplicity" for reassuring his employers that all was well.
  
Kerviel spent 38 days in custody after his arrest in 2008 and has since started a job at a small IT company in a suburb of Paris.
  
Trial hearings are set to end on June 25 and the court is expected to take several weeks to deliberate before delivering a verdict.
 

Date created : 2010-06-08

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