Societe Generale boss admits faults in control systems
The head of French bank Societe Generale, who faced pressure to resign over a massive rogue trader scandal, admitted in an interview published on Tuesday that the bank's internal control systems had faults.
By Agencies |
PARIS: The head of French bank Societe Generale, who faced pressure to resign over a massive rogue trader scandal, admitted in an interview published on Tuesday that the bank's internal control systems had faults.
Chairman Daniel Bouton, speaking to French Internet site Mediapart, said: "The controls were carried out in accordance with the rules for each area concerned.
But "a horizontal method for assessing the risk of fraud, (and) a pooling of the information, was missing.
"It was the lack of this method that allowed Jerome K to play on the different deficiencies, which his experience in the backoffice had enabled him to see."
Jerome Kerviel, 31, was involved in deals which the French bank says cost more than seven billion dollars in the biggest known rogue trading scam.
He has been charged with breach of trust, fabricating documents and illegally accessing computers.
He is free on bail and has denied any wrongdoing, insisting Societe Generale managers knew about his massive deals and that he has been made a scapegoat.
At the end of May, a scathing report for Societe Generale by an auditing firm described a flawed "general environment" that helped allow Kerviel to rack up the record-breaking losses.
The report by PriceWaterHouseCoopers (PWC) pointed to a number of specific problems in the design and the implementation of the French banking giant's control system.
"Several key controls that could have identified fraudulent mechanisms were lacking," it said, adding that the procedures linking the different levels of checks were insufficient.
Before becoming a trader, Kerviel worked in the backoffice, the area of an investment bank where security checks and transaction processing take place.
Bouton on two occasions offered to resign from the board following revelations in January that the bank had suffered the losses.
He was previously chairman and chief executive but was replaced as chief executive in April.
Chairman Daniel Bouton, speaking to French Internet site Mediapart, said: "The controls were carried out in accordance with the rules for each area concerned.
But "a horizontal method for assessing the risk of fraud, (and) a pooling of the information, was missing.
"It was the lack of this method that allowed Jerome K to play on the different deficiencies, which his experience in the backoffice had enabled him to see."
Jerome Kerviel, 31, was involved in deals which the French bank says cost more than seven billion dollars in the biggest known rogue trading scam.
He has been charged with breach of trust, fabricating documents and illegally accessing computers.
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He is free on bail and has denied any wrongdoing, insisting Societe Generale managers knew about his massive deals and that he has been made a scapegoat.
At the end of May, a scathing report for Societe Generale by an auditing firm described a flawed "general environment" that helped allow Kerviel to rack up the record-breaking losses.
The report by PriceWaterHouseCoopers (PWC) pointed to a number of specific problems in the design and the implementation of the French banking giant's control system.
"Several key controls that could have identified fraudulent mechanisms were lacking," it said, adding that the procedures linking the different levels of checks were insufficient.
ADVERTISEMENT
Before becoming a trader, Kerviel worked in the backoffice, the area of an investment bank where security checks and transaction processing take place.
Bouton on two occasions offered to resign from the board following revelations in January that the bank had suffered the losses.
ADVERTISEMENT
He was previously chairman and chief executive but was replaced as chief executive in April.
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