Sarkozy seeks answers on bank fraud

Societe Generale says it believes trader did not gain financially from $7bn loss.

    Societe Generale has filed a legal complaint against Kerviel accusing him of defrauding the bank [AFP]
    Internal controls

    As details of the scandal emerged, it was revealed that Kerviel was alleged to have gambled on trades worth more than $73bn, a figure larger than the bank's current value.

    "Questions will have to be asked about the internal controls of the banking systems"


    Raymond Soubie, senior French presidential adviser

    Raymond Soubie, a senior French presidential adviser, said: "Questions will have to be asked about the internal controls of the banking systems. It is very amazing that just one person could build up a position of more than 50bn euros [$73.5bn]."

    However, Christian Noyer, the Bank of France governor, insisted that Societe Generale "is stronger today" after it had "cleaned" up its accounts.

    Francois Fillon, France's prime minister, said he had asked his finance minister to report within a week on the scandal, the biggest of its kind in financial history. 

    "We are faced with a massive fraud and it will have to be explained how it happened, so we can put in place measures to avoid [a repeat]," he said.

    Whereabouts unknown

    Societe Generale has filed a legal complaint against Kerviel accusing him of defrauding the bank.

    The trader, whose photograph has been shown on newspaper front pages around the world, joined the bank in 2000 and had been on the trading desk since 2005.

    His whereabouts were unknown, but Elisabeth Meyer, his lawyer, said he was "not on the run".

    Many commentators and experts said it was difficult to believe a lone trader could have successfully hidden such colossal losses.

    Elie Cohen, an economy professor and research director at France's National Centre for Scientific Research, said: "The feeling in the dealing rooms is that it is not possible for an individual to do all that.

    "They think Societe Generale has overdone the fraud to cover up some bad market operations."

    About 100 Societe Generale shareholders from France, Belgium and the Netherlands have started legal action against the bank seeking damages.

    SOURCE: Agencies


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