Bank spares rogue trader Kerviel 4.9 billion euro fine
French bank Societe Generale said Wednesday it would spare rogue trader Jerome Kerviel from paying the full 4.9 billion euros of compensation awarded in a massive fraud scandal.
"There is no question of demanding such sums from one single man," Societe Generale spokeswoman Caroline Guillaumin told France Info radio, referring to the amount (worth about 6.8 billion dollars), awarded by a Paris court Tuesday.
Kerviel was sentenced to five years in jail with two years suspended and ordered to pay back the 4.9 billion euros his market gambles, months before the financial crisis escalated with the fall of Lehman Brothers bank.
He was found guilty of fraud and breach of trust by carrying out covert stock market deals worth 50 billion euros which were discovered in January 2008 and almost brought down Societe Generale, one of Europe's biggest banks.
The 33-year-old said at his trial that in his current job as an IT consultant he earns 2,300 euros a month -- putting the record compensation award far beyond his means.
He said he had been made a scapegoat for a banking system based on greed.
"I have the feeling they wanted me to pay the price for everyone else and that it was necessary to save (Societe) Generale bank and that they killed Private Kerviel," he told Europe 1 radio.
"I am crushed by the weight of the sentence," he said in his first public reaction to his conviction. He has appealed it and will remain at liberty until that appeal is heard.
"At that point we will be able to come back to the question of damages and interest," Guillaumin said.
His lawyer had called for him to be cleared of all charges except the false computer logs, blaming the bank for the scandal and claiming the trader's bosses turned a blind eye to his excesses as long as the money was rolling in.
That view was echoed by many French newspapers Wednesday, who were shocked by the colossal fine that would take Kerviel many lifetimes to pay.
"The Only Guilty One?" asked the front-page headline of the left-leaning Liberation daily, which said in an editorial that the young ex-trader was paying for "all the sins of the bank."
La Tribune business daily said that by delivering such a "fanciful" verdict, the judges exposed themselves to accusations that the legal system "protects the powerful and savages the weak."
Britain's Financial Times said that "such disastrous behaviour (by Kerviel) can only happen in a corporate culture that allows traders to cover their tracks even after they have bet the bank."
There was astonishment too within President Nicolas Sarkozy's ruling UMP party.
Gerard Longuet, the leader of UMP senators, said the fine was "slightly ridiculous" and that he was surprised that "one single man should carry the entire and exclusive responsibility."
Societe Generale's lawyer Jean Veil has called the sentence a "moral compensation" for its employees and shareholders. The judge said 140,000 jobs at Societe Generale had been endangered by Kerviel's actions.
On discovering the risky deals in January 2008, Societe Generale was forced to make emergency transactions worth 50 billion euros -- equal to nearly all its shareholder capital at the time -- to balance its books.
The bank has admitted failings in its controls, for which it was fined four million euros in July 2008, but insisted at the trial that managers could not have tracked all Kerviel's trades when he logged false data to cover them.
© 2010 AFP