French president Nicolas Sarkozy has questioned the responsibility of executives of the Société Générale (SocGen) in the loss of nearly € 7 billion, writes Lara Marlowe, in Paris.
"I don't like to pass personal judgment on people, especially when they are in difficulty," Mr Sarkozy said, "but when you are well paid, which was doubtless legitimate, and there's a big problem, you cannot escape responsibility."
Earlier yesterday, Daniel Bouton, the chief executive of SocGen, told Europe 1 radio that his offer to resign still stands. "The board has asked me to stay. Of course, my resignation remains on the table. The board will decide to examine it when it wants," he said.
Mr Sarkozy said his first concern was the survival of the bank. "I mainly hope that we can ensure the future of the network; I'm thinking of its employees," he said. "But when there's an event of this nature, it cannot remain without consequences regarding responsibility."
SocGen's share price fell another 3.82 per cent, to € 71.05, on the Paris bourse yesterday, bringing its losses since the beginning of the year to 28.5 per cent.
Jérôme Kerviel, the 31-year-old trader the bank holds responsible for the loss of nearly €4.9 billion, turned himself in on Saturday. He was taken in a convoy with flashing lights and sirens to the financial branch of the Palais de Justice yesterday.
Two investigating magistrates, Renaud Van Ruymbeke and Francoise Desset, began questioning Mr Kerviel after 6 pm and were to decide last night whether to formally place him under investigation for abuse of confidence, forgery and computer piracy.
The public prosecutor, Jean-Claude Marin, has requested that Mr Kerviel remain in custody. Mr Marin said the young man acted out of ambition, because he wanted to "create sparks" and earn a € 300,000 bonus for 2007.
Mr Kerviel has revealed he started manipulating SocGen's computer system two years ago, a year earlier than was thought. He created fake trades to balance out risky long-term futures positions, so the bank's security system would not detect risk. He ended up with a € 50 billion portfolio - equivalent to the gross national product of Morocco and more than the bank itself is worth.
As of December 31st, 2007, these astronomical positions were still positive three days before the bank decided to liquidate them. Mr Kerviel and his lawyers now argue that it was the bank that precipitated the losses by closing down his portfolio as world stock markets fell.
Meanwhile, the small shareholder group APPAC yesterday filed a lawsuit for insider trading against a member of the board of SocGen who sold €85 million worth of shares in the bank on January 9th and 10th.
