Lawmaker pushes review of SocGen's rogue trader tax writeoff
A French lawmaker said Thursday she had succeeded in getting authorities to review the 1.7-billion-euro ($2.3 billion) tax writeoff that Societe Generale took over rogue trading losses.
The bank incurred a loss of nearly five billion euros in 2007 when it quickly unwound some 50 billion euros in positions built up by its trader Jerome Kerviel, but was controversially able to write off 1.7 billion of that against its tax bill.
Socialist senator Marie-Noelle Lienemann disclosed the finance ministry had responded positively to her request to look into the writeoff, accepted by the tax authorities under the previous conservative government.
While her office conceded the response was normal following a request by a lawmaker, the member of the Senate's commission looking into tax evasion by banks has indicated she doesn't plan to stop pushing the issue.
Lienemann said it is "indispensible to analyse closely if the very generous reimbursement to Societe Generale was just, legitimate and calculated correctly."
The senator pointed out the tax writeoff can be accorded only where it is certain that the fraud was carried out without the complicity of managers and there was no breakdown of internal controls.
She questioned the allowing of the tax writeoff in 2008 when Kerviel wasn't tried until 2010 and that the finance ministry judged there was no failure of the bank's internal control systems.
French regulators fined Societe Generale four million euros for its slack oversight and the case cost a number of senior executives at the bank their jobs.
Only Kerviel was prosecuted, however, and his 2010 conviction absolved his superiors of any complicity.
Kerviel had argued the bank knew he was making uncovered bets on futures markets and had turned a blind eye as long as he was making a profit.
He was ordered to compensate the bank for the 4.9-billion-euro loss despite the fact Societe Generale had been able to write off a third of that amount.
Societe Generale still posted a net profit of 947 million euros for 2007, but that was down considerably from the 5.2 billion euros in earned in 2006.
© 2013 AFP