CORRECTED: French rogue trader Kerviel sentenced to three years' jail

5th October 2010, Comments 0 comments

A court on Tuesday sentenced French rogue trader Jerome Kerviel to three years in jail plus two years suspended for a massive fraud scandal that cost Societe Generale bank almost five billion euros.

The main Paris criminal court also ordered him to pay his former employer damages of 4.9 billion euros (currently 6.8 billion dollars) -- the amount it said it lost through his risky covert stock trades.

The court found Kerviel guilty of breach of trust, forgery and entering false data into computers in the affair, in which his bosses at Societe Generale, one of Europe's biggest banks, said he carried out huge and risky stock trades without their knowledge.

Kerviel's lawyer had called for the 33-year-old to be acquitted, blaming the bank for the 2008 rogue trading scandal that almost destroyed it and claiming that the trader's bosses knew what he was up to.

But presiding judge Dominique Pauthe told the court that defence evidence heard in his trial in June "does not allow us to deduce that Societe Generale was aware of Jerome Kerviel's fraudulent activities".

Kerviel "exceeded his mandate by taking speculative positions without the knowledge of the bank, on a gigantic scale," he added.

Kerviel dodged a crowd of reporters when he arrived at the court shortly before 10:00 am (0800 GMT), slipping into the courtroom through a side-door accompanied by police and his lawyer.

He sat in court, dressed in a dark suit and white shirt, as Pauthe read the judgement.

Kerviel admitted regularly exceeding trading limits and logging false transactions to cover his gambles, but said this was common practice among traders and that his bosses turned a blind eye as long as earnings were high.

At the last trial hearing in June, his lawyer Olivier Metzner asked how a "normal boy" like Kerviel could "end up here", facing years in jail on charges of breach of trust, forgery and entering false data into computers.

"How do you create (people like Kerviel) if not for financial gain?" he said, referring to the bank.

Kerviel's former employers and the state prosecutors bringing criminal charges branded him a liar who knowingly misled his bosses and put Societe Generale and its employees in peril.

He claimed all along that his bosses knew of and approved his risky deals, which he says were visible to his colleagues and bosses on the trading desk.

On discovering the risky deals in January 2008, Societe Generale was forced to unwind positions worth 50 billion euros (69 billion dollars) -- equal to nearly all its shareholder capital at the time.

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.

The trial heard from more than 30 witnesses but shed little light on what motivated Kerviel, who said simply that he tried to do his job in the interests of the bank.

"Why did he do these things? Hoping for a bonus? To become a star?" state prosecutor Philippe Bourion asked in June.

"That's the only mystery the prosecution will not be able to solve."

© 2010 AFP

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