Jerome Kerviel took risks “no bank in the world could take” and lied to hide billions lost in risky deals, one of his former bosses from Societe Generale said on Wednesday at the ex-trader’s trial.
The bank said Kerviel gambled away 4.9 billion euros (US$7.1 billion at the time) in one of the biggest rogue trade cases ever, seen as a symbol of the excesses blamed for the financial crisis.
Jean-Pierre Mustier, the former head of Societe Generale’s investment division in which Kerviel worked on the “Delta One” trading desk, stood centimeters away from the accused and reproached him for his “inhuman” risk-taking.
“You lied to me all along,” Mustier told Kerviel in a heated testimony, accusing him of taking “risks that no bank in the world could take,” running up US$50 billion in trades that Societe Generale rushed to unwind.
“I still don’t understand why Jerome Kerviel did it ... and he has never said sorry,” he said. “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.”
Societe Generale, one of Europe’s biggest banks, said it suffered the heavy losses when it was forced to unravel 50 billion euros of unauthorized trades after discovering the fraud in January 2008.
Kerviel went on the attack at the opening of the trial on Tuesday, saying his bosses encouraged him to take risks and turned a blind eye to excesses as long as earnings were rolling in.
On Wednesday, the 33-year-old said he frequently passed trading limits and logged fake transactions to cover his gambles, accusing the bank of tolerating such breaches of trading limits.
“It was a common practice,” Kerviel told the court. “Every morning we got an e-mail informing us of limits being exceeded,” he said, but there was “never a reprimand.”
“The bosses — that was me. The bosses didn’t know” of his excesses, Mustier said. “We encouraged traders to know how to take risks — not simply to take risks.”
Mustier, 49, stepped down as head of investment banking in May 2008 in the wake of the Kerviel scandal and left the bank altogether last year.
He was subject to an insider-trading investigation by the French market regulator AMF, which has yet to rule on his case.
The former executive told the court he had comforted Kerviel when the trader became anxious and apparently suicidal at an early stage in the bank’s investigation of his dealings.
“I even accompanied him to the toilet. I don’t often accompany young men to the toilet, but I was afraid he would commit suicide. I was extremely worried,” he said.
At Tuesday’s hearing, the ex-trader 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.
Branded a crook by his ex-employer, but seen by others as a scapegoat, Kerviel faces criminal charges along with civil suits by the bank and other plaintiffs, including employees and shareholders.
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