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France

Former SocGen boss slams Kerviel for 'inhuman' risk-taking

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Video by William EDWARDS

Text by News Wires

Latest update : 2010-06-09

The former head of SocGen's investment division blamed Jerome Kerviel for unauthorised trades that led to 4.9 billion euros in losses, accusing him of taking "inhuman" risks on the second day of the disgraced trader’s trial.

AFP - FA former Societe Generale boss on Wednesday told a Paris court that Jerome Kerviel took risks that "no bank in the world could take", on the second day of the trader's trial over billions in losses.
   

The bank blames Kerviel for 4.9 billion euros (7.1 billion dollars at the time) of losses in a case seen as a symbol of the banking excesses blamed for the financial crisis.
   
Jean-Pierre Mustier, the former head of SocGen's investment division in which Kerviel worked on the "Delta One" trading desk, stood inches away from the accused and slammed him for his "inhuman" risk-taking.
   
Kerviel took "risks that no bank in the world could take", running up 50 billion dollars' worth of trades that Societe Generale rushed to unwind, Mustier said in a passionate testimony.
   
"I still don't understand why Jerome Kerviel did it... and he has never said sorry," he added.
   
Societe Generale, one of Europe's biggest banks, said it suffered the heavy losses when it was forced to unravel 50 billion euros of unauthorised trades when it discovered the fraud in January 2008.
   
Kerviel says his bosses encouraged him to take risks and turned a blind eye to excesses as long as earnings were rolling in.
   
The 33-year-old admitted that he frequently passed trading limits and logged fake transactions to cover his gambles, accusing the bank of tolerating such breaches of trading limits.
   
"It was a common practice," Kerviel told the court. "Every morning we got an email informing us of limits being exceeded," he said, but there was "never a reprimand".
   
Mustier insisted: "Traders are informed of their limits."
   
The SocGen executive stepped down as head of investment banking in May 2008 in the wake of the Kerviel scandal and left the bank altogether last year.
   
He was subject to an insider-trading investigation by the French market regulator AMF, which has yet to rule on that case.
   
He told the court he had comforted Kerviel when the trader became anxious and apparently suicidal at an early stage in the bank's investigation of his dealings.
   
"I even accompanied him to the toilet. I don't often accompany young men to the toilet, but I was afraid he would commit suicide. I was extremely worried," he said.
   
At Tuesday's hearing the ex-trader presented himself as an ordinary, hard-working man, now a computer consultant earning 2,300 euros per month -- a big mark-down from the tens of thousands he earned as a trader.
   
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.
   
Branded a crook by his ex-employer but seen by others as a scapegoat, Kerviel faces criminal charges along with civil suits by the bank and other plaintiffs, including employees and shareholders.
   
His lawyer Olivier Metzner on Tuesday showed the court a projection of the seating plan in Kerviel's office to illustrate his point, saying bosses could also view his trades via the computer system at any time.
   
He showed a spreadsheet recording the transactions of Kerviel's trading team, saying it showed that his activities were easily traceable. The bank's lawyers contested this claim.
   
Societe Generale's lead lawyer Jean Veil told reporters that he would show a video that demonstrates how traders did stressful work on several screens and could not be expected to monitor their neighbours' activities.
   
Trial hearings are set to end on June 25 and the court is expected to deliberate for several weeks before giving a verdict.

Date created : 2010-06-09

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