Bank executive calls French trader 'disloyal and a cheat'

14th June 2010, Comments 0 comments

A Societe Generale executive called Jerome Kerviel "disloyal and a cheat" in court Monday as the trial of the bank's former trader over a multi-billion-euro scandal entered its second week.

The 33-year-old Kerviel is blamed by Societe Generale, one of Europe's biggest banks, for 4.9 billion euros (7.1 billion dollars at the time) in losses it incurred in January 2008 by making unauthorised trades.

During the trial's first week, Kerviel admitted to exceeding trading limits and logging false transactions to cover his gambles, but said this was common practice and that his bosses turned a blind eye as long as earnings were high.

Christophe Mianne, head of the stocks and derivatives trading division at Societe Generale, on Monday took the stand to challenge Kerviel's defence.

"I am extremely shocked to hear Mr Kerviel say that we allowed him to do this," said Mianne.

Kerviel was "dishonest, disloyal ... and a cheat," he said.

Societe Generale said it suffered the heavy losses when it was forced to unravel 50 billion euros -- nearly all of the bank's worth -- in unauthorised trades allegedly made by Kerviel.

Mianne testified that traders abide by a code of loyalty and know that they are not to exceed trading limits.

"We don't have a sign that reads 'No fraud' at the entrance of the trading floor," he quipped.

Mianne said Kerviel had been uncooperative with bank managers who sought to establish the extent of Societe Generale's exposure and had even increased his risks during trading a few days before the scandal became public.

Branded a crook by his ex-employer but seen by others as a scapegoat, Kerviel faces up to five years in jail and a fine of 375,000 euros if convicted of breach of trust, forgery and entering false data into computers.

The court on Monday also heard testimony from one of Kerviel's friends, Valerie Rolland, who works in the "ethics department" at Societe Generale.

Kerviel "is a regular guy, not at all a big-time gambler," she said.

Rolland said she "found it difficult to imagine that within a bank you can take such positions".

Testimony has centred on whether Kerviel had sole responsibility for the rogue trading scandal, now seen as symptomatic of the excesses that led to the financial crisis following the collapse of Lehman Brothers in September 2008.

Lawyers have argued over whether his colleagues and bosses could have overlooked his excesses while sitting within metres (yards) of him at the "Delta One" trading desk.

Trial hearings are set to wrap up on June 25 and the court is expected to deliberate for several weeks before handing down a verdict.

© 2010 AFP

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