Broker’s statement revives questions about Sociйtй Gйnйrale hierarchy
PARIS: Moussa Bakir, the stockbroker questioned last week in connection with the investigation of the \4.82 billion trading scandal at Sociйtй Gйnйrale, has told French police investigators that he knew his friend, the former trader Jйrфme Kerviel, had a “problem” with his supervisors, reviving lingering questions about how much the banks hierarchy knew about the traders unauthorized dealings.
Bakir, according to brief excerpts from his recent statements to French financial police published Thursday in the popular French daily Le Parisien, also said that he was unaware of any fraudulent dealings by Kerviel.
“I knew that he had a problem with his bosses without knowing why,” Bakir said. The scandal led to a loss equivalent to $7.1 billion.
The assertions by Bakir, a 32-year-old broker at Newedge, Sociйtй Gйnйrales futures brokerage previously known as Fimat, follow the disclosure last week of nearly 2,000 pages of electronic message exchanges that the broker had with Kerviel between early October 2007 and Jan. 18, Kerviels last day at the bank.
The communications, in which the two friends even exchange maudlin jokes about going to prison, suggest that Kerviel confided at least some details of his actions, which Bakir said were “irresponsible” but, in his view, not “illegal in the sense of the law.”
Bakirs claim, if true, that Kerviel was in conflict with his superiors raises fresh questions about the extent of knowledge among Kerviels superiors about his unauthorized trades, and when they first became aware of the scale of his bets, which eventually exposed the bank to more than \50 billion of risk - more than the companys market value.
One person with knowledge of Sociйtй Gйnйrales trading control systems confirmed Kerviels claimed that his immediate superiors - themselves former traders with years of experience - had several clear warnings that Kerviel was trading beyond his authority.
In his statement to the police in late January, Kerviel identified two supervisors of his equity derivatives trading team - known as Delta One - whom he said were familiar with his activities going back to last April.
These colleagues, according to lawyers with knowledge of the case, were Martial Rouyиre, head of the Delta One trading desk, and his deputy, Eric Cordelle.
Rouyиre has since been questioned by the French authorities, and a lawyer for Sociйtй Gйnйrale, Jean Veil, has said that he expects Kerviels “entire hierarchy” to eventually be questioned.
Kerviel told the police that his supervisors received an e-mail message from the banks accounting services in April 2007 questioning his trades.
“The only thing that was said to me is to manage a way to straighten out,” Kerviel said.
“They dont intervene. The other warnings that they get after dont make them react more.”
The other warnings came several months later.
In November, the surveillance office at Eurex, the Frankfurt-based derivatives exchange, sent two e-mail messages to Sociйtй Gйnйrales compliance department questioning “several transactions” executed by Kerviel over the previous seven months that had raised red flags with the exchange.
According to the person familiar with Sociйtй Gйnйrales control procedures, Rouyиre and Cordelle, as Kerviels direct superiors, would have been contacted by compliance officers following the e-mail messages from Eurex.
“A question like that, coming from outside, is something unusual,” said the person, who asked not to be identified because he was not authorized to speak to the press.
This person said it was “inconceivable” that Kerviels superiors were not alerted, though he conceded that they might not have realized the size of the bets the trader was making.
This person said that on at least one occasion in late 2006 or early 2007, Kerviel made a \500,000 profit on an unspecified one-way bet.
But Kerviels role on the trading desk did not allow him to speculate with the banks money, and he was reprimanded by his bosses, who said his profit would not be included in the tally used to calculate year-end bonuses.
The incident would have been sufficient grounds to fire Kerviel, this person said, and normally he would have been watched closely afterward. “They should not have let Kerviel continue to take risks,” the person said. Rouyиre was questioned last month by the French authorities.
Photos and contact details for Rouyиre and Cordelle were recently removed from a directory on Sociйtй Gйnйrales internal computer system, according to bank employees.
Melody Jeannin, a Sociйtй Gйnйrale spokeswoman, said Thursday that the bank would not comment on the status of specific personnel, saying only that “several” individuals were either being dismissed or had resigned in connection with the Kerviel affair.
