Exclusive: the dramatic new evidence set to reopen SocGen 'rogue trader' Kerviel case


In January 2008, French bank Société Générale announced it had lost 4.9 billion euros through the reckless actions of one of its traders, Jérôme Kerviel, claiming it had been unaware of his actions. Kerviel, who maintained from the start that his hierarchy knew what he was doing, received a jail sentence for forgery, fraud and hacking, and was ordered to pay the bank, in damages, the huge sum it lost. But last month, Mediapart can reveal, the former head of the French police’s financial crime squad, who led its investigation of the events and who was once convinced of the bank’s claims that Kerviel acted on his own, has given a statement to a French judge in which she details why she later became convinced, during her second investigation into the affair in 2012, the trader's bosses knew of his actions. Commander Nathalie Le Roy said she now feels she had been “used” by the bank in the 2008 investigation, how it later held back key evidence she requested, of witness accounts that Kerviel’s superiors were already made aware in 2007 of his extravagant trades, of allegations that Société Générale staff were made to sign gagging agreements and revealed that its claimed losses have never been independently verified. Martine Orange reports on a dramatic turnaround in the affair which appears bound to reopen the case.

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Last month, Nathalie Le Roy, former head of the French police financial crime squad (la brigade financière), arrived for questioning at the central Paris offices of Judge Roger Le Loire. By the time she left, the verdict in the case of one of the world’s biggest-ever trading scandals was placed in serious doubt.

In January 2008, Commander Le Roy was assigned to lead the police investigation into the official complaint lodged by the Société Générale bank that it had lost 4.9 billion euros through the actions of a rogue trader, Jérôme Kerviel. By the end of her investigation, Le Roy was convinced that Kerviel had run up the losses in operations that he hid from his superiors, gambling fortunes in reckless trades.

Kerviel was charged with forgery, breach of trust and fraudulent use of the bank’s computer systems and was found guilty and sentenced in 2010 by a Paris court to five years in prison – two suspended – and was ordered to pay the Société Générale damages and interest of 4.9 billion euros. Kerviel, who has always maintained that the bank knew what he was doing, lodged an appeal, but the sentence was upheld in a ruling in 2012. After a subsequent and final appeal, the jail sentence was last year upheld but the amount of the damages was overturned, and a new sum is yet to be fixed by the Versailles appeals court.

Kerviel, now 38, was jailed last May and released on parole in September, when he was ordered to wear an electronic tag.

Commander Le Roy (whose rank is equivalent to a British chief inspector) was appointed in 2012 to lead another police investigation into the affair, this time into complaints lodged by Kerviel against the bank, for forgery and use of falsified documents, and for obtaining a ruling under false pretences. The complaints were subsequently thrown out by the Paris public prosecutor’s office, but after Kerviel lodged an appeal against that decision they were submitted to Judge Roger Le Loire, an independent examining magistrate.

It was for that reason that he summoned Le Roy for questioning on April 9th this year. Le Roy, who is no longer head of the financial crimes squad, told the judge how, during her 2012 enquiries, she came to doubt the conclusions of her 2008 investigation.

“With the different statements and the different documents I had in my hands, I had the feeling and then the certitude that the hierarchy above Jérôme Kerviel could not have been unaware of the positions taken by the latter,” Le Roy told the judge in her statement,  Mediapart can reveal.

It was the first time Le Roy had made known her change of opinion. “I never manifested myself so as to not interfere with the course of justice, but I admit that my summons today brings me relief,” she said in her statement. “For a long time I put myself in question.”

Le Roy described how the 2008 investigation had been completely taken over by the Société Générale, with the bank imposing its own version of events, choosing who would reply to questions, reportedly placing pressure on witnesses, but also, during her 2012 investigation, refusing to hand over requested evidence.

She also spoke of the strange attitude of the public prosecutor’s office in its handling of her investigation into Kerviel’s complaints against the bank; despite the fact that Le Roy voiced her doubts to the prosecutor’s office about the case against Kerviel as a lone, rogue trader, despite the witness statements she collected that supported her doubts, and despite the requests she made for further expert reports during that second investigation, the prosecutor’s office closed her investigation and base its conclusions on the Société Générale’s version of events.    

Daniel Bouton révélant les pertes de la Société générale le 24 janvier 2008 © Reuters Daniel Bouton révélant les pertes de la Société générale le 24 janvier 2008 © Reuters

When the bank’s losses were first revealed in the early hours of January 24th 2008, the Société Générale set out its own account of events with force, of how it had fallen victim to a rogue trader, a person who worked on his own, playing with billions of euros without the knowledge his hierarchy, despite all the controls in place. The bank’s then chairman, Daniel Bouton, was swift to announce, and before all the trading operations had been completed, that Kerviel’s extravagant behaviour had cost the bank losses of 4.9 billion euros. The Société Générale has never wavered from its initial version of events, including the amount of its losses.

All of those witnesses who had questioned the bank’s version of events, who demonstrated that the functioning of markets and the banking world made it impossible for the Société Générale not to have known anything of what was going on, were ignored – and some were denigrated. There were even cases of Société Générale employees who lost their jobs for having contradicted the bank’s official line. One of them was Philippe Houbé, who worked at its brokerage arm Fimat (which merged into Newedge Group) and who testified at Kerviel’s  appeal hearing in 2012.

But the emergence of Nathalie Le Roy’s statement to Judge Roger Le Loire last month will be less easy for the bank to dismiss. She is a respected police officer among both her former colleagues at the financial crimes squad and the judiciary; recognised for her diligence and competence, Le Roy has led a number of notably difficult investigations which have won her respect among examining magistrates.

One of those is Eva Joly, a former French examining magistrate and judge with the Paris high court who has led a number of successful high profile political and business corruption investigations, for which she has won international recognition (see here, here and here). “I had worked with her on numerous investigations,” Joly told Mediapart. “I know her professionalism.”

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