Kerviel, who has been ‘helping police with their enquiries’ for the last few days, has been charged initially with breach of trust, falsifying documents, and computer abuses. However, prosecutors weren’t able to make a fraud charge stick or keep him inside, and he was bailed from prison yesterday (apparently he’s not allowed to trade as a condition of this bail, though we’d hope he’s learned his lesson on that score).
But it’s becoming clear that the fun and games are far from over. Kerviel has apparently denied any suggestion that he committed fraud, insisting that he made no personal financial gain and was just trying to get his hands on a €300,000 bonus (which seems a pretty measly prize for someone with €50bn in the balance, but there you go). What’s more, his lawyers are clearly going to contest SocGen’s interpretation of events – that Kerviel was a rogue trader who by remarkable brilliance managed to bypass their incredibly good risk management systems. And it seems to be working – if the prosecutors bought this story, they presumably wouldn’t have let him out.
Jean-Claude Marin, the man in charge, only fuelled the fire yesterday. He said Kerviel told him that several other traders had acted in a similar way with the full tolerance of their superiors, while German exchange Eurex had actually contacted his employer two months beforehand to enquire about his positions (he fooled them by creating false documents to justify his trades). All of which makes it seem pretty unlikely that his losses came as a total shock, as the bank is now claiming.
In fact, judging by the papers, there seem to be very few people around who do believe SocGen’s protestations of ignorance – bankers are lining up to tell the papers just how improbable it is that Kerviel had built up such a huge position without anyone noticing. Barring a quite breathtaking display of incompetence from his superiors, of course.
Either way, it doesn’t look good for SocGen’s beleaguered CEO Daniel Bouton. The board has already rejected his resignation once, but it might prove to be no more than a stay of execution – yesterday President Sarkozy gave him a vote of confidence that Gordon Brown would have been proud of giving to Peter Hain, saying: ‘When rewards are high and there’s a big problem, no one can escape responsibility.’ It seems increasingly likely that he’ll have to fall on his sword at some point, even if it’s only after the bank has lurched through the current crisis.
As for Kerviel – this episode probably won’t do wonders for his trading career, but it’s a big profile-booster. This time next year, we’ll probably see him on Celebrity Big Brother.