Senior Société Générale officials "closed their eyes" to a culture of cheating on the trading floor, so long as it generated profits, the alleged "rogue trader", Jérôme Kerviel, told investigators.
In verbatim extracts from his questioning at the weekend, seen by The Independent, M. Kerviel says that the ruling maxim of SocGen was: "Not seen, not caught. If you are caught, you are hanged."
"I cannot believe that my superiors were not aware of the kinds of sums that I was committing," M. Kerviel told investigators. "As long as we earned money and things weren't too obvious, as long as things could be arranged, nothing was said."
France's second largest bank has already been thrown on to the defensive by the decision of two investigating judges to drop a possible charge of "fraud" against M. Kerviel. Instead M. Kerviel was accused of three counts of forgery, breach of confidence and computer hacking. He was released from custody on Monday night.
The bank has insisted that M. Kerviel's "unauthorised" trades on European shares futures were an act of "exceptional fraud" or even "financial terrorism". The amount lost – €4.8bn (£3.6bn) – is the largest sum ever to be attributed to the misdeeds of a single trader.
The investigating judges appear to have accepted M. Kerviel's argument that he was not seeking direct personal gain but cutting corners to make money for the bank.
It emerged yesterday that a trader in the same department as M. Kerviel committed suicide last year after evading official bank controls and losing €9m. The incident, hushed up until it appeared in the French press yesterday, appears to back up M. Kerviel's assertion that there was a culture of rule-breaking on the trading floor at SocGen.
His claims will be at the heart of the investigation by the judges, Renaud van Ruymbeke and Françoise Desset, who released M. Kerviel from custody on condition that he remained in France and kept away from trading floors.
A mostly French and British media race was under way yesterday to be the first to find, photograph and interview a man who has become the object of obsessive speculation on the internet. British reporters and British and French television crews are camped outside the Paris home of M. Kerviel's brother, Olivier.
"It's like the Wild West, and Kerviel is an outlaw with 'Wanted' signs all over the place," said one of the best-known French celebrity photographers, Pascal Rostain. "It's enormous, every paper in the world is after his photo."
The internet is teeming with new Kerviel sites and blogs, some critical but mostly genuinely, or ironically, hero-worshipping. He is variously described as the "Che Guevara of Finance" or the "James Bond of SocGen" or the "Bin Laden of the Bourse".
In 48 hours of questioning by fraud squad officials at the weekend, M. Kerviel admitted "taking huge positions" (on shares futures markets) which he "masked with fictitious operations". According to the transcripts, M. Kerviel mocked the bank's allegation that he had used fiendishly clever methods to evade detection. "Any controls properly applied would, in my opinion, have uncovered these operations," he said. M. Kerviel said his motive was to "make money for the bank" but also to prove his worth to senior bank officials, who looked down on his inferior "university education and banking career". The transcript also confirms allegations made by the president of SocGen, Daniel Bouton, that M. Kerviel had deliberately set out to lose money on his unauthorised trades because his "winning" position had, at one stage, become embarrassingly large. A potential profit of €1.4bn at the end of last year "arrived too rapidly ... for me to be able to declare it without being investigated", M. Kerviel told investigators.
M. Kerviel declared a profit of €55m in 2007. He then went on a gambling spree, "buying" thousands of futures contracts worth €50bn (30 per cent more than the value of SocGen). His intention, the bank says, was to take "voluntarily losing positions" to reduce his illicit "winnings". The downturn in European stock markets meant that he lost more money than he intended.
Kerviel's testimony
* "I can't believe that my superiors were not aware of the kinds of sums that I was committing. It is impossible to generate such profits with small positions."
* "That's what led me to believe that, as long as I was making a profit, my bosses would close their eyes to the methods and amounts I used ... With normal activities, with normal commitments [of cash], no trader could generate so much money."
* "Not seen, not caught. If you are caught, you are hanged."
* "What gave me my profits was the real position and as soon as I let my fictional position fall, my balance would be adjusted accordingly..."
* "As long as we earned money and things weren't too obvious, as long as things could be arranged, nothing was said."
* "I wanted to make money for my bank. That was my prime motivation, not to enrich myself personally."
* "I realised, during my first interview in 2005 [when he moved to a trading job at SocGen] that I was regarded as inferior to [other traders] because of my university qualifications and my professional career until then. I had not come straight to the front office [the trading department]. I came through the middle office [accounting and controls] and I was the only one."
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