International Writers Magazine:Money: Too tight to mention
be it from me to impugn the integrity of the French banking establishment,
but something about the story of one trader single-handedly causing
€5billion inlosses to Société Générale
stinks like a Camembert cheese that was left out in the sun too
Kerviel hero for our times?
I have some clerical
experience working for banking houses, but my real experience in business
derives from the many years that I worked as a designer for Fifth Avenue
accessory houses. These companies were bloody, infected corpses of sloth
and corruption in a dying industry, and its no surprise that the
industry eventually went extinct in this country. Nevertheless, I was
in the creative end of things, and I reveled in my job, which was as
interesting as any job you could ever hope to get in New York.
My last job in accessories lasted 12 years, before the industry finally
went belly-up. It was for a place Ill call Wen-Dell Creations.Once
there was a fire in the factory office, caused by a manager who was
a chain smoker. He emptied his ashtray into a wastebasket and left for
the night, leaving a smoldering cigarette in the rubbish.
When we arrived the next morning we found the door to the factory broken
down by the fire department. The office was a waterlogged wreck. The
bosses immediately sprang into action, dragging every piece of redundant
overstock merchandise in the factory into the office and soaking it
with buckets of water before the insurance adjuster arrived. They claimed
that the merchandise had been damaged by the fire hoses and eventually
collected full compensation for useless boxes of belts and racks of
raggedy dresses. The manager who caused the fire even got a bonus out
of the insurance proceeds ha-ha!
Now, if you believe that one trader, Jérôme Kerviel, could
single-handedly lose €5billion, I salute you. But between the time
that the initial trading irregularities were discovered and the time
that French regulators were called in several days elapsed, including
Black Monday, Jan. 21, when Société Générale
liquidated a lot of the positions he had taken in equity based derivatives,
in order to stem the losses they claim.
Would it be stretching the readers credulity too far to suggest
that, knowing there was going to be a scandal involving losses in the
billions anyway, the banks officers decided to throw in whatever
sundry odds and ends happened to be laying about and then let Kerviel
take the fall for the entire mess?
That is presumably the argument his lawyers will advance when the affair
is eventually adjudicated in court. Kerviel is undoubtedly guilty of
losing money in unauthorized trading, but when he receives his long
jail term, he will most assuredly be taking the fall for every mistake
the bank has made in the last few years, or I will eat my beret.
French banking is a wondrous process to behold, like the time the historic
Crédit Lyonnais building in central Paris mysteriously burned
to the ground, like the Reichstag, after it had been discovered that
the government-owned bank was being used as a cash cow for establishment
politicians, who had received massive loans which were then
forgiven. Or Eurotunnel, whose investors have never received so much
as a centime on their investment despite the fact that it has been operating
at capacity for over ten years. (On the freight side)
I certainly would not have the audacity to compare SocGen board chairman
Daniel Bouton, former ENArque and chef du cabinet of conservative prime
minister Alain Juppé, to a sleazy New York garment industry company
owner. But human nature being what it is, its entirely conceivable
that when the opportunity presented itself to get rid of some dogs he
was stuck with in the general hysteria of mass selling that took place
last Monday, he possibly availed himself of it.
As for Mr. Kerviel, he can be glad that Devils Island no longer
exists as a prison, and that the years he will spend breaking rocks
while his former colleagues are discussing the comparatives merits of
Bordeaux and Beaujolais wines will be spent in a more temperate climate.
Just what I said. The following is reprinted from Le Monde de
Les avocats de Jérôme Kerviel, Mes Elisabeth Meyer et Christian
Charrière-Bournazel ont dénoncé "les conditions
volontairement précipitées et tout à fait anormales"
dans lesquelles la banque "a liquidé des positions qui auraient
pu se redresser avec le temps". Parlant du "scandale de la
Société Générale" et dénonçant
le "lynchage médiatique" de leur client, les deux avocats
ont accusé le PDG de la Société Générale
Daniel Bouton d'avoir "taxé" Jérôme Kerviel
"de fraude" et de l'avoir "livré aux chiens".
Selon eux, leur client "qui a été formé par
la banque à faire du profit, n'a commis aucune malhonnêteté
et n'a pas détourné un seul centime et n'a profité
d'aucune manière des biens de la banque". "En s'acharnant
sur Jérôme Kerviel, la banque croit pouvoir élever
un écran de fumée qui détournerait l'attention
du public de pertes beaucoup plus substantielles qu'elle a accumulées
ces derniers mois, notamment dans l'invraisemblable équipée
des subprimes", ont-ils encore déclaré.
Borok Jan 28th 2008
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