SocGen Blames Kerviel for $2.5 Billion French Revenue Shortfall

  • Ex-trader is responsible vis-a-vis French taxpayers, Veil says
  • Kerviel’s lawyer to speak in Versailles trial this afternoon

Societe Generale SA alleges that Jerome Kerviel is responsible for a 2.2 billion-euro ($2.5 billion) shortfall in French tax revenue because the convicted rogue trader caused a record trading loss that left the bank with a deferred tax credit in 2008.

“If there hadn’t been a loss, we wouldn’t have been forced to ask for a tax credit,” Societe Generale’s lawyer Jean Veil said during the third and final day of a trial at the Versailles court of appeal. “The person responsible to taxpayers for the shortfall in tax is Kerviel. He’s the one who owes the 2.2 billion” euros.

The former trader -- seen as a folk hero by some -- is trying to shift blame onto France’s second-biggest lender. While several verdicts have found him guilty for the massive losses, an order requiring him to repay the bank was overturned. He was buoyed last week by a ruling at a Paris employment tribunal, which included stinging criticism of the bank, and a decision in this week’s hearing could have an effect on the bank’s taxes after ministers promised to monitor court rulings.


Societe Generale will only repay the 2.2 billion euros to French tax authorities if Kerviel compensates the bank the entire 4.9 billion euros of losses, Veil said. The civil trial is meant to determine how much, if anything, Kerviel owes the bank for the loss that occurred eight years ago and the level of Societe Generale’s responsibility.

French Finance Minister Michel Sapin told lawmakers in January that the tax authority would rely on new court decisions in the case to revisit the bank’s tax situation. The bank doesn’t expect the civil case to have any effect on its deductions.

Marion Lambert-Barret, another lawyer for Societe Generale, said the failings of the bank’s control systems -- “considered as exemplary at the time” -- are all down to Kerviel’s intent to deceive with bogus trades, fake e-mails and abuse his colleagues’ trust.

Kerviel was intent on being seen as a trustworthy person, Lambert-Barret said. His colleagues “had no idea he was lying to their faces.”

Retrial Bid

Kerviel’s defense team will have an opportunity to share their views on the case Friday afternoon. Aside from the civil trial in Versailles, the former trader has started a new legal challenge to his conviction after Nathalie Le Roy, the police officer who led Kerviel probes in 2008 and 2012, expressed concerns last year about how she was pressured to focus solely on evidence that would incriminate him.

His bid for a criminal retrial is in limbo after judges at France’s court of review and reassessment said in March they want to wait for inquiries into the use of forged documents, witness subordination and obtaining a ruling under false pretenses to run their course.

Francois Martineau, a third lawyer for the bank, said Kerviel is trying to prove he is the victim in the case, instead of Societe Generale, an “absurd” theory which doesn’t absolve him of responsibility.

“He was convicted for forgery, now he’s accusing Societe Generale of forgery,” Martineau said. “He was convicted for abuse of trust, now he’s accusing Societe Generale of a con.”

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