PARIS (AP) — The Paris appeals court on Wednesday ordered
former Societe Generale trader Jerome Kerviel to spend three years in
prison and pay back a staggering €4.9 billion (about $7 billion) in
damages for one of the biggest trading frauds in history.
The
35-year-old Kerviel, who never profited personally from his unauthorized
trades, says he was a scapegoat for the bank and a victim of a
financial system that runs on greed and profits. His lawyer David Koubbi
called the verdict "absolutely lamentable" and said his team will
consider taking the case to France’s highest court.
Because
Kerviel cannot realistically pay the money back in his lifetime, the
bank suggested it would refrain from seeking full repayment.
A
lower court convicted Kerviel in October 2010 of forgery, breach of
trust and unauthorized computer use for covering up bets worth nearly
€50 billion — more than the market value of the entire bank — in 2007
and 2008.
By the time his trades were discovered in early 2008,
when banks were sliding into a global crisis, had amassed losses of
almost €5 billion on those bets.
The sentence — a five-year prison
term, with two years suspended, plus the payback of all the losses he
incurred — shocked many in the French public. After a global financial
crisis that many blamed on big banks, many believed Kerviel’s claim that
he was a victim of an unjust system.
The appeals court Wednesday
upheld the full conviction and sentence. It did not send Kerviel
directly to prison, leaving him free pending his decision on whether to
appeal to the Court of Cassation. He has five days to make that
decision.
Kerviel arrived at the courthouse in a dark suit and
looking tense and left through a back entrance without speaking to
reporters. He had sought an acquittal, saying the bank had turned a
blind eye to his exorbitant trades as long as they made money.
Prosecutors and the bank say that isn’t true.
Societe Generale lawyer Jean Veil said the verdict was "a great satisfaction."
He
suggested the bank would take into account Kerviel’s income and assets
and not try to make him pay back the full fine. "Societe Generale will
look at it with realism," Veil told reporters.
He indicated,
however, that the bank could take over royalty earnings from a book
Kerviel wrote about the scandal as well as any income he earns from
movie deals. "It would have been indecent for Mr. Kerviel to be able to
preserve revenues coming from the exploitation of his fraud."
While
Societe Generale could have the right to tap Kerviel’s future income,
it was not clear whether they would do so and how much they could take
from him.
Kerviel was fired from the bank in the wake of the
scandal, and held a modest job for a while as a computer consultant. He
was unemployed at the time of his appeals trial earlier this year.
A
colleague from Societe Generale who testified on Kerviel’s behalf said
the court didn’t take into account others at the bank who likely knew
about Kerviel’s risky bets.
A junior futures trader such as
Kerviel "could in no case do what he did without being seen" by his
superiors, Philippe Hoube said. "If justice had played its role, they
wouldn’t have sentenced him so heavily."
An internal report by the bank has said 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 of them faced charges.
The bank
says Kerviel made bets on futures contracts on three European equity
indices. It said at the time that his net position appeared unremarkable
because he balanced his real trades with fictitious transactions.
Copyright 2012 The Associated Press.
