French judges quiz both traders in Societe Generale case

22nd February 2008, Comments 0 comments

Jerome Kerviel, 31, has been charged with breach of trust, fabricating documents and illegally accessing computers.

   PARIS, February 22, 2008 - French judges on Thursday again questioned the
rogue trader charged in the seven-billion-dollar scandal at Societe Generale
as well as another trader at a bank subsidiary, sources close to the case said.
   Jerome Kerviel, 31, has been charged with breach of trust, fabricating
documents and illegally accessing computers. He was questioned for more than
four hours on Thursday, his third grilling since being charged on January 28.
   Thursday's questioning came a day after an internal bank inquiry found "at
this stage" that Kerviel acted alone in the scandal.
   The judges also met separately Thursday with another trader linked to
Kerviel who worked for Societe Generale subsidiary Fimat -- now Newedge -- and
has been named as an assisted witness in the case.
   An assisted witness means he can testify in the presence of a lawyer.
   The questioning centred on his relationship with Kerviel, focusing on an
exchange of instant messages between the traders.
   Some 1,600 pages of instant messaging texts sent from September 2007 to
January 2008 have been seized by police investigating charges that Kerviel
falsified documents and stole computer codes to cover up his unauthorized
   The second trader's lawyer, Jean-David Scemama, has filed suit for fraud
over the publication of some of the messages in the press, which he said "can
lead to believe that the two men were accomplices."
   One message sent by the broker to Kerviel in December 2007 read, "You have
done nothing illegal according to the law," French press reports said.
   The second trader was initially held for questioning by police on February
7, some two weeks after Societe Generale revealed it had lost 4.82 billion
euros (7.1 billion dollars) at the hands of a rogue trader.
   "He will continue to help the search for the truth, freely, under no
constraints, not even from his employer," said the lawyer for the second
trader, who is still employed by Newedge.
   While Kerviel has insisted he acted alone, he has suggested that his bosses
at Societe Generale knew that he was dealing with huge sums of money and that
they turned a blind eye as long as he was not in the red.
   Kerviel is being held in custody during the investigation into what Societe
Generale says were unauthorised trades worth at least 50 billion euros, more
than the leading French bank's own capital.
   The scandal led to a 3.35-billion-euro (4.9-billion-dollar) loss in the
fourth quarter of 2007, the French bank revealed Thursday.
   The internal bank inquiry published late Wednesday found that Kerviel's
allegedly unauthorised trading had not been detected because of his
sophisticated techniques, but it also pointed the finger at internal audit and
risk control failures.
   The inquiry, chaired by former Peugeot Citroen chief executive Jean-Martin
Folz, highlighted that controllers did not "systematically deepen their
checks" and pointed to an absence of controls likely to identify fraud.
   The report suggested the strengthening of three areas, namely computer
security, procedures to tip off the management of wrongdoing, and stronger
human resources checks.


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