2nd Trader, Moussa Bakir Emerges in Inquiry in France - New York Times
2nd Trader, Moussa Bakir Emerges in Inquiry in France
Published: February 9, 2008
PARIS — French investigators said Friday that they were questioning a second trader in connection with Société Générale’s 5 billion euro ($7.1 billion) loss, the worst in history caused by a rogue trader.
Adam Berry/Bloomberg News
Moussa Bakir, a 32-year-old broker, in a Web photo.
The announcement cast further doubt on the bank’s assertion that the rogue trader, Jérôme Kerviel, acted alone in amassing more than $50 billion in unauthorized positions on stock futures.
Also Friday, a Paris court ruled that Mr. Kerviel, a 31-year-old junior trader, had to go to jail while awaiting trial, reversing a judge’s ruling last week that he could remain free as his case was investigated. At that time, the Paris prosecutor had argued that he should be detained to keep him from harming himself.
Courtroom observers said Mr. Kerviel appeared shocked by the court’s decision on Friday. The prosecution said Mr. Kerviel could be detained for 4 to 12 months.
Legal experts said the revelation that Mr. Kerviel might not have been the lone operator suggested that oversight of Société Générale’s trading room might have been recklessly lax. That could put added pressure on Daniel Bouton, the bank’s chief executive, and other top managers to explain more fully the circumstances that led to the losses.
“It really suggests a higher-level failure of risk management than we thought two weeks ago,” when the bank initially disclosed its trading losses, said Christopher Mesnooh, an international business lawyer in Paris.
“It’s one thing to overlook one person,” he added, “but if it’s two people then it begins to stagger the imagination.”
The man French financial authorities were questioning was identified as Moussa Bakir, a 32-year-old broker at Newedge, Société Générale’s futures brokerage unit (formerly called Fimat). He has not been accused of any crime.
According to two people with knowledge of the investigation, Société Générale has provided prosecutors with new evidence related to Mr. Kerviel’s fictitious trades — trades he used to cover up his unauthorized positions — including a series of messages between Mr. Kerviel and Mr. Bakir sent over the bank’s computer system.
According to these people, who requested anonymity because they were not authorized to discuss the case, Mr. Bakir sent one such message to Mr. Kerviel on Nov. 30, which read, “You have done nothing illegal in terms of the law.”
Both of the people said this message was only a “small part” of the communications linking the two men, and there was more “interesting” correspondence that had yet to be disclosed.
The Nov. 30 message was sent just four days after Eurex, the Frankfurt-based derivatives exchange, sent a query to Société Générale’s compliance department seeking clarification of several suspicious trades by Mr. Kerviel. It had been the second letter from Eurex in less than three weeks questioning Mr. Kerviel’s investment strategy and, especially, his habit of entering trades through a broker at Fimat, rather than from Société Générale’s offices.
In a Nov. 7 letter, Eurex asked whether Mr. Kerviel entered the transactions automatically or manually.
Investigators are also examining Mr. Kerviel’s cellphone bills, which Jean Veil, a lawyer for Société Générale, described earlier this week as unusually high, suggesting that there “could have been” others involved.
Mr. Veil emphasized that the bank had found no evidence to suggest that Mr. Kerviel had accomplices.
“That said,” he added, “I am asking myself how he could have built up a 1,000-euro monthly cellphone bill given that he worked all day long in an office with telephones.”
A spokeswoman for the prosecutor’s office, Isabelle Montagne, confirmed that the police had taken a male employee of Newedge into custody around midday on Thursday and that he was expected to be held for questioning until around midday on Saturday. She said the police had also raided Newedge’s offices on the Champs-Élysées on Thursday, taking documents and computer files.
A spokeswoman for Société Générale, Joelle Rosello, declined to comment, saying the bank was “cooperating closely with the investigation.”
Last month, Société Générale merged Fimat into Newedge, a joint venture with the futures brokerage unit of Calyon, the investment banking arm of Crédit Agricole, another French bank. Representatives for Newedge referred all inquiries to Société Générale.
Stéphane Bonifassi, a business crime expert at the law firm Lebray & Associés in Paris, said the emergence of Mr. Bakir as a possible accomplice might have helped the prosecution at the hearing Friday.
“That there is this other guy may have strengthened the need to place Mr. Kerviel in pretrial detention to avoid them talking together or coordinating their stories,” Mr. Bonifassi said.
Frédérik-Karel Canoy, a lawyer for small shareholders who was present as the decision was read, said Mr. Kerviel reacted as if “the sky had fallen on his head.”
“When he heard the words ‘placed in detention’ you could see his body crumple slightly as if it suddenly hit him that he really was going to prison,” Mr. Canoy said.
Another lawyer who was present said that Mr. Kerviel was escorted away from the hearing room by three gendarmes but that he was not handcuffed. Mr. Kerviel’s lawyer, Elisabeth Meyer, wept, Mr. Canoy said.
Ashen-faced as she addressed a crush of cameras after the verdict, Ms. Meyer vowed to appeal. “I cannot explain this decision,” she said.
Last month, the Paris prosecutor, Jean-Claude Marin, requested Mr. Kerviel be detained to protect him from the media and professional pressure, and out of concern he might harm himself once he understood the gravity of his situation.
James Kanter contributed reporting from Paris.
