PARIS – France’s highest court upheld a prison sentence for a one-time rogue trader convicted of carrying out one of the biggest trading frauds in history, but threw out the 4.9 billion euros ($7 billion) in civil damages he’d been ordered to pay back.
Jerome Kerviel almost took down his bank, Societe Generale, seven years ago with 4.9 billion euros in losses. Convicted in 2010, he sees himself as a victim of a system that turned a blind eye to his illegal trades as long as they made money for the bank.
The case drew attention worldwide before the 2008 global financial crisis, and a court’s ruling that Kerviel was on the hook to repay the bank’s staggering losses himself struck many as surprising: The 37-year-old was last reported to be making a few thousand dollars per month as a computer consultant.
Kerviel is currently in Italy, walking back to Paris on a pilgrimage after meeting the pope. After a day striding along roads in Tuscany, he appealed Wednesday to supporters to join him in his “march against injustice” and said he wasn’t on the run: “If French justice decides that I have to go to prison, I’m available. I’m not looking to flee. I am on the road to return to France: You all know where I am.”
The Court of Cassation — the high court — upheld a lower court’s three-year prison sentence for Kerviel, while ordering the civil damages case to be retried by an appeals court.
But it also ruled that the lower court’s decision failed to take into account mistakes by Societe Generale when Kerviel was ordered to repay the bank’s entire losses.
Jean Veil, a lawyer for the bank, said its executives would explain in the new trial that they discovered “errors in our system” right as Kerviel’s case came to light. Since then, the bank spent “hundreds of millions” to fix the problems and change its control system, he said.
But at his Tuscan hotel, the tanned and bearded Kerviel said he felt “great relief” that the case appeared to be now turning more against the bank.
“It’s a big, big victory because the foundation of the case has collapsed … and I’m going to fight so that the truth comes out,” the 37-year-old said, adding that prosecutors had said they would seek his incarceration quickly. “I’d like Paris prosecutors to stop being Societe Generale’s lawyers, and start being the attorney for society overall.”
The appeals court had upheld Kerviel’s October 2010 conviction for forgery, breach of trust and unauthorized computer use for covering up bets worth nearly 50 billion euros — more than the market value of the entire bank. It sentenced him to a five-year prison term — with two years suspended — and ordered he pay 4.9 billion euros in damages.
An internal report by the bank, however, found managers failed to follow up on 74 different alarms about Kerviel’s activities.
A few of the bank’s executives resigned in the scandal’s aftermath, including longtime Chairman Daniel Bouton. Kerviel’s superiors were questioned in the probe, but none faced charges.
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