Jerome Kerviel Crushes Bank Societe Generale (Part8)

http://st0ckman.blogspot.comJa... 29 (Bloomberg) -- French President Nicolas Sarkozy said senior executives at Societe Generale SA should face ``consequences'' for the record loss that resulted from unauthorized trading at the bank.Sarkozy, 53, told reporters after a speech near Paris late yesterday that a share of the blame should be shouldered by the bank's top managers, who include Chairman Daniel Bouton and Vice Chairman Philippe Citerne.``When someone is very highly paid, even when it's probably justified, you can't avoid responsibility when there's a major problem,'' Sarkozy said, in response to a question about Bouton.Societe Generale executives are a new target for government officials, who have criticized Bank of France Governor Christian Noyer for failing to inform them sooner of the trading debacle. Bank employee Jerome Kerviel was charged yesterday with falsifying documents, computer hacking and breach of trust by French judges.Kerviel's unauthorized bets led to 4.9 billion euros ($7.2 billion) in trading losses, the biggest in banking history. Societe Generale, France's third-largest bank, said Kerviel amassed 50 billion euros in positions in European stock index futures, an amount that exceeded the company's market value.Kerviel, 31, admitted to hacking into computers and faking e-mails to hide trades since 2005, Prosecutor Jean-Claude Marin said at a press conference yesterday. Kerviel was released yesterday after being charged.`Good Man'``He's not a robber, he's a good man,'' said Christian Charriere-Bournazel, a lawyer for Kerviel. ``The fault was with Mr. Bouton. It was he who decided to unwind these positions.''When it disclosed the losses on Jan. 24, the Paris-based bank said directors refused an offer by Bouton, 57, to resign after the trades were discovered. Bouton said yesterday on Europe 1 radio that his resignation ``is still on the table and the board can act on it whenever it chooses.''A Societe Generale spokesman wasn't available to comment on Sarkozy's remarks.``Daniel Bouton has no choice but to resign,'' Jean Arthuis, former finance minister and head of the French Senate commission on finance, said on France Inter radio today.Bouton's compensation in 2006 totaled 3.4 million euros, including a salary of 1.25 million euros and bonus of 2.18 million euros, according to the company's annual report. Citerne took home a base salary of 750,000 euros and a bonus of 1.3 million euros. Kerviel earned about 100,000 euros, according to the bank.Seeking an ExplanationBouton and Citerne, who have been chairman and vice chairman since 1997, said they won't receive bonuses or stock options for 2007 and will forgo salaries for the first half of this year.Societe Generale rose the most in five years in Paris trading on speculation the bank may become a takeover target. The stock gained 7.4 euros, or 10 percent, to 78.45 euros, leaving declines this year at 21 percent.Bouton, an ex-government official and budget director, and Noyer, a career-long public servant, should expect to face more pressure from Sarkozy, particularly if the trading scandal hurts his approval ratings, said Jean-Marc Lech, co-chairman of Paris- based polling firm Ipsos SA.``Bouton is a former cabinet member, Noyer has been around politics for most of his career,'' Lech said in an interview.Prime Minister Francois Fillon has ordered an investigation to ``explain how this happened.'' Finance Minister Christine Lagarde said the report she's preparing for Fillon will focus on why the bank's internal checks failed and whether financial companies should be forced to impose more controls.Lagarde said today on LCI television that she wants Noyer to explain why he waited three days before informing her that Societe Generale was the victim of a trading fraud.``Everyone must consider their own responsibility,'' Sarkozy said. ``When there is an event of this nature, it cannot remain without consequences.''To contact the reporter on this story: James Hertling in Paris at

Channel: News & Politics
Uploaded: January 29, 2008 at 6:56 pm
Author: st0ckman

Length: 03:36
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