Ex-workmate slams Kerviel's 'stratospheric' trades
Jerome Kerviel's "stratospheric" stock market risks nearly brought down the French bank Societe Generale, an ex-workmate told a Paris court on Thursday at the former trader's fraud trial.
The bank accuses Kerviel of secretly gambling away 4.9 billion euros (7.1 billion dollars at the time) in the huge 2008 rogue trading case, seen as a symbol of the excesses blamed for the financial crisis.
After being branded a liar on Wednesday by a former top boss at the bank, Kerviel faced testimony by one of his ex-colleagues at the trading desk, Salim Menouchi.
Kerviel "put in danger" the bank by making trades "for stratospheric amounts", Menouchi, 31, told the court.
"I can't explain his actions. I am disappointed by his behaviour," said Menouchi, who was the only one to show up to court out of four traders scheduled to testify on Thursday.
"All traders have limits they must respect," he said.
Societe Generale, one of Europe's biggest banks, said it suffered the heavy losses when it was forced to unravel 50 billion euros of unauthorised trades in January 2008. Its market capitalisation at the time was about 56 billion euros.
Kerviel, 33, has admitted regularly exceeding trading limits and logging false transactions to cover his gambles, but says this was common practice and that his bosses turned a blind eye as long earnings were high.
Menouchi said he was not aware such practices were common, prompting Kerviel to interject: "I am very surprised. It was obvious."
On Wednesday Jean-Pierre Mustier, the former head of Societe Generale's investment division, denied bosses knew of Kerviel's excesses and told the court Kerviel had engaged in "inhuman" risk-taking.
"You lied to me all along," Mustier angrily told Kerviel in court, accusing him of taking "risks that no bank in the world could take."
"I still don't understand why Jerome Kerviel did it ... and he has never said sorry," he added. "How can he say he did it for the good of Societe Generale, to earn it money? He is lying, like he has always lied."
Menouchi said he had "friendly relations" with Kerviel but they did not discuss their trading activities. He recalled that shortly before the scandal broke, Kerviel appeared to realise that he was in trouble.
The two had a drink together on the evening of January 18, days before Societe Generale announced its losses, and the next day Kerviel sent him a text message saying: "I am going to get fired. Nice knowing you."
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.
Lawyers have wrangled over whether Kerviel's colleagues and bosses could have overlooked his excesses while sitting within metres of him at the "Delta One" trading desk.
Another former fellow trader, 38-year-old Antoine Delorme, told the court late Wednesday that he thought Kerviel was taking positions that were "completely crazy".
But he also admitted that fictitious deals "were routine" on the trading floor although these were "managed" to give traders some leeway in their transactions.
At the opening of the trial on Tuesday Kerviel presented himself as an ordinary, hard-working man, now a computer consultant earning 2,300 euros per month -- a big mark-down from the tens of thousands he earned as a trader.
Looking tense and solemn, with bags under his eyes, Kerviel told the court that bank managers "encouraged" him to take big risks on European markets.
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