Two and a half years after former junior investor Jerome Kerviel allegedly led his bank to a 4.9-billion euro loss through unauthorized trades, the trial of the so-called "five-billion euro man" has begun.
Kerviel says his superiors knew of the illegal activity
The saga of the largest fraud scheme in financial history took a new turn Tuesday as the trial of accused "billion-euro gambler" and former Societe Generale trader Jerome Kerviel began in Paris.
Kerviel faces charges of breach of trust, forgery and manipulation of computer data, all of which could bring him up to five years in prison and fines of up to 375,000 euros ($448,000).
In early remarks, Kerviel, 33, told the court that he was "encouraged" by his bosses to take risks. "The encouragement from my superiors encouraged me to continue," he said.
Internal investigators discovered the unauthorized trades, totaling about 50 billion euros, in January 2008. The bank notified the authorities and liquidated the illegal holdings, bringing in a loss of 4.9 billion euros for the bank. Police then arrested Kerviel, who has since been freed on bail.
Societe Generale claims to have been completely unaware of Kerviel's activity. The bank's attorney, Jean Veil, told daily newspaper Sueddeutsche Zeitung that Societe Generale would also be suing Kerviel to "demand compensation for the losses that the bank suffered."
"That is, on the one hand, the 4.9 billion euros in financial losses, and, on the other hand, the severe damage to the bank's image that it is currently suffering," he said, citing precedent cases in the United States as support for the bank's image-loss claim.
Defense as a 'simple man'
The bank lost nearly 5 billion euros in the scheme
Kerviel, born to a metal worker and a hairdresser and raised in provincial France, has become something of an anti-hero in the country. He became a heavyweight in the banking sector despite lacking the typical elite education that most people in his former position enjoyed.
He has laid out his defense in his recently published book, "The Spiral: Memoirs of a Trader," in which he presents himself as a simple man who got carried away in the greedy culture of the banking system.
He claims Societe Generale has made him a scapegoat, and that his supervisors knew of the risky trades long before they were made public but chose to ignore them because he was earning good returns for the bank.
"Are the banking excesses due to Jerome Kerviel? Or are they due to a banking system?" said Kerviel's attorney Olivier Metzner in comments published by the newspaper Metro on Monday.
The trial is likely to be watched closely by many people in the French banking industry who want to know how Kerviel was able to cover up his actions for so long.
The court could hand down a decision as early as the end of June.
Author: Andrew Bowen (dpa/apn/AFP)
Editor: Nancy Isenson