France court fines Societe Generale ex-employee $6.7b for fraud
A court in France has slapped $6.7 billion damages plus three years prison sentence on an ex-trader of Societe Generale, Jerome Kerviel for fraud.
Societe Generale is France’s second biggest bank, and majority shareholders of Ghana’s SG-SSB Bank.
The bank was rocked with this scandal between 2007 and 2008.
The court convicted 33-year old Kerviel, a computer consultant, on all counts of fraud, greed and the pursuit of profit at any cost, which led to the bank losing $6.7 billion between 2007 and 2008.
Kerviel’s fraudulent activities came to light in January 2008 and the court held him solely responsible for the losses to the bank.
The court ordered Kerviel to pay back the losses and go to jail for five years, with two years suspended to make three years.
But his lawyers argue that he is being made a scapegoat for a financial system gone haywire with much more people involved than just him.
Kerviel told the court his bosses tolerated his risk-taking activities as long as it they made profits, but only gave him up when they begun to incur losses.
But the authorities at Societe Generale have completely denied Kerviel’s claims saying that he used an unauthorized computer to cover up bet worth 50 billion euros.
Reports from the Paris Stock Exchange says the announcement of the verdict shot up the banks shares by 3.6% for the first time in two years, and the banks profit has also bounced back this year on the back of improved retail banking.
Efforts to reach officials of SG-SSB in Ghana to find out what that meant for the bank, proved futile.
Meanwhile Kerviel has been banned for life from working in the financial industry, but his lawyers say they will appeal the sentence.
He will remain free pending that appeal, and the damages would also be suspended during the appeals process.
The $6.7 billion fine on Kerviel is equivalent to the entire Gross Domestic Product of Benin, and is worth 20 Airbus A380 jumbo jets.
French media calculated that, based on his current salary of $3,150 a month as a computer consultant, it would take Kerviel 177,536 years to pay off the damages.
One of his lawyers told TV cameras and reporters “I hope you all will donate a euro each to Jerome Kerviel.”
While trading for the bank, Kerviel took home a salary and bonus of about $155,700 — a relatively modest sum in the financial world.
In 2007, Kerviel amassed more than $1.94 billion in profits for Societe Generale, the presiding judge noted.
But in the end, the bank’s loss of $6.7 billion stands as the largest-ever alleged fraud by a single trader.
Through his deliberate actions, he endangered the solvency of a bank and put the jobs and future of some 140,000 employees at risk.
Meanwhile the bank’s CEO Daniel Bouton and its head of investment banking Jean-Pierre Mustier stepped down in the wake of the scandal in 2008.
By Samuel Dowuona