Accused rogue trader Jerome Kerviel went on the attack against his former bank employers before they gave their first evidence on Wednesday to back allegations that he secretly gambled tens of billions of euros.
Kerviel said on the first day of the showcase trial, on Tuesday, that Société Générale managers “encouraged” him to take risks on European share futures.
Société Générale, one of Europe’s biggest banks, said it had to unravel €50-billion of unauthorised trades when it discovered the fraud in January 2008 and that it lost €4,9-billion on Kerviel’s actions.
The judge concentrated on the first day on examining Kerviel’s psychological profile. In a hearing that broke down into squabbling between the lawyers, Kerviel denied he was to blame for the losses and insisted his bosses knew the risks and backed him.
On Wednesday, the court will question Jean-Pierre Mustier, the former head of Société Générale’s investment division in which Kerviel worked on the “Delta One” trading desk.
The court must decide whether Kerviel is solely responsible for the losses in a case seen as a symbol of the banking excesses blamed for the financial crisis.
A psychological assessment cited at Tuesday’s hearing described Kerviel as a “balanced” individual, but presiding Judge Dominique Pauthe sought to shed light on what prompted the trades and asked: “Who are you, Mr Kerviel?”
The ex-trader presented himself as an ordinary, hard-working man, now a computer consultant earning €2 300 per month. He said he made mistakes but that his bosses were happy as long as profits rolled in.
“The daily encouragement from my superiors did not stop me. Rather they encouraged me to continue,” he told the judge.
Kerviel risks a maximum sentence of five years in prison and a fine of €375 000 if convicted on charges of breach of trust, falsifying and using fake documents and entering false data into company computers.
Crook or scapegoat?
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.
Kerviel looked tense and solemn, with bags under his eyes, as he stood before the judges on Tuesday, and took out a cigarette as soon as the hearing ended.
He told the court it would be “impossible” to make his trades without others knowing, “not for more than a day, in any case”.
His lawyer, Olivier Metzner, showed the court a projection of the seating plan in Kerviel’s office to illustrate the point and said that bosses could also view his trades via the computer system at any time.
He projected 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.
Société Générale’s lead lawyer, Jean Veil, told reporters afterwards 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.
Metzner retorted that this was a “fantastical” claim.
“It seems that Société Générale is either blind, or it doesn’t want to see,” he told reporters.
Mustier is to testify among the first witnesses at Wednesday’s hearing, which will examine the trading limits Kerviel was supposedly subject to.
Mustier was subject to an insider-trading investigation by the French market regulator AMF, which has yet to rule on that case.
Trial hearings are set to end on June 25 and the court is expected to deliberate for several weeks before giving a verdict. — AFP