Bouton Won’t Apologize for Calling Kerviel a ‘Terrorist’

Former Societe General Trader Jerome Kerviel
Jerome Kerviel argues his superiors knew he was exceeding trading limits, so he didn’t betray their trust or commit other crimes he was found guilty of in 2010. Photographer: Balint Porneczi/Bloomberg

Former Societe Generale SA Chief Executive Officer Daniel Bouton said it was a mistake to call Jerome Kerviel a “terrorist,” while refusing to apologize for the remark when he testified at a Paris appeals court today.

Bouton, who made the remark after the bank announced in 2008 it lost 4.9 billion euros ($6.2 billion) on unauthorized trades, refused defense lawyer David Koubbi’s request today to apologize, saying he would await the court’s judgment.

“I loved Societe Generale,” Kerviel said when asked if he had any final remarks before closing arguments begin next week. “Honestly, I made mistakes,” he said, explaining he had been raised with a strong work ethic and “my goal was to earn the maximum for the bank.”

Kerviel, 35, is fighting a three-year jail sentence and an order to repay the Paris-based bank’s loss. He has argued that his superiors knew he was exceeding trading limits, so he didn’t betray their trust or commit other crimes he was found guilty of in 2010. During his appeal, he advanced a theory that the bank plotted to use unwinding his positions to distract attention from an almost 2 billion-euro loss on U.S. subprime mortgages.

Bouton, 62, denied the conspiracy when he appeared as one of the final witnesses before the appeals court.

“I don’t understand the reasoning that one blow could hide another blow,” said Bouton, comparing the idea to a television show.

He began his testimony by describing how the bank detected Kerviel’s 50 billion euros in unauthorized futures positions, and the fake hedges used to mask the exposure.


“It was a pretty astonishing coincidence” that as the bank prepared to announce the subprime loss, it discovered Kerviel’s actions through checking with counterparties to confirm orders, Bouton said.

Witnesses for the bank and prosecution denied either prior knowledge of Kerviel’s actions or that the bank opted to lay its losses from the subprime market on a single trader evading controls. Kerviel was called back to the bank over the weekend in January 2008 to explain his trades to managers. His responses continually changed and Bouton called him “an astounding liar,” who couldn’t be relied upon to aid in Societe Generale’s work uncovering the extent of the trades.

Trading ‘Catastrophe’

Bouton offered to resign soon after announcing the loss, a move that was turned down by the board despite calls by then-President Nicolas Sarkozy that management face “consequences.” He gave up the CEO post three months later and stepped down as chairman in 2009, complaining of “repeated attacks against me personally” after the loss.

During Kerviel’s first trial in 2010, Bouton called the trader’s actions “evil” and said the incident was a “catastrophe” for the bank.

Societe Generale was sanctioned 4 million euros by France’s bank regulator in July 2008 for compliance failures after an investigation showed “serious shortcomings.”

Today is the final day of witness testimony and a verdict is expected later this year.

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