Investigators at Société Générale believe that rogue trader Jérôme Kerviel was aided by an assistant who processed a large number of his transactions during the fraudulent trading spree that cost the bank â,¬4,9-billion.
In a report on an internal investigation into the biggest rogue operation in financial history, bank auditors said there were ”indications of internal collusion involving a trading assistant”. They suspect the accomplice of registering almost 15% of the fictitious trades used by Kerviel (JK) to disguise his suspect positions.
But the report said it had been unable to question the assistant because of the criminal investigation. ”The complicity of this trading assistant, if confirmed, would have appreciably facilitated the fraudulent activities of JK,” the report said.
”Due to the current ongoing criminal investigation, we have been unable to question this employee on this subject. The possibility of such internal collusion must therefore be confirmed by the courts,” it added.
The assistant was not named but the bank did not deny a report in the International Herald Tribune on Friday that the man in question is Thomas Mougard. He has denied any complicity.
SocGen has consistently asserted that Kerviel acted alone, without accomplices — a view upheld in an interim report by the Folz committee three months ago that found 75 occasions on which SocGen’s internal controls failed to respond adequately to alerts about Kerviel’s trades.
The widespread failings in the bank’s internal risk controls are set out in the damning 69-page report compiled by some 40 internal auditors that was published on Friday night by a committee of three independent directors headed by former Peugeot chief Jean-Martin Folz.
The report found Kerviel’s immediate supervisors proved ”deficient”. It said his direct manager lacked trading experience and showed an ”inappropriate degree of tolerance” towards the taking of intra-day directional positions. He and his own manager, the report added, failed to react to the alerts that would have allowed them to identify his concealed positions.
Two of Kerviel’s immediate supervisors are to be sacked by the bank. Eric Cordelle, Kerviel’s manager, and Martial Rouyère, head of the bank’s Delta One derivatives trading desk, where the trader worked, are being dismissed because of failings in supervision, sources within the bank confirmed on Friday night.
The rogue trader, who ran up positions of as much as â,¬50-billion, is blamed by the bank for the â,¬4,9-billion loss it made in January, when it unwound his fictitious positions days after uncovering them.
Kerviel, who was released from prison on bail in early March, is being investigated for forgery, breach of trust and unauthorised computer use. He accuses the bank of negligence in failing to detect his false trades.
Cordelle, who also denies any complicity or wrongdoing, has joined the bank’s criminal action against Kerviel as a civil party, sources said.
A second report on Friday night by external auditors PricewaterhouseCoopers into SocGen’s measures to improve its internal risk control systems and prevent a recurrence of rogue trading, generally approved the new measures. The bank said these would be in place by the end of next March.
Winding up the Folz committee’s investigations, SocGen said: ”The causes and size of the trading losses discovered in January 2008 have been completely identified, measures have been put in place or are under way in order to avoid the occurrence of any new incidents of the same type and the findings of the investigations have been made public.”
A SocGen spokesperson said: ”The individual breaches of responsibility identified during the investigations have been followed up by appropriate measures.” – guardian.co.uk Â