NEW YORK: In the six years since he was fired by French bank Société Générale, Jérome Kerviel has never denied making 50 billion euros (Rs3.8 lakh crore) worth of unauthorised trades or committing forgery and fraud to cover it up.
The scale of his audacious derivatives trades nearly brought about the demise of the big bank. And the intricacy of the rogue trader’s financial subterfuge was enough to persuade the country’s highest court that he deserved a three-year prison sentence.
But in a strange turn of rogue trading events, Kerviel has persuaded a French labour tribunal that he should not have been fired for his actions.
On Tuesday, the tribunal ruled that his illegal actions presented “no real and serious cause” for his dismissal, his lawyers said. The panel ordered Société Générale to pay Kerviel roughly 450,000 euros (Rs3.4 crore) in compensation.
The ruling, by a panel of employers and trade union representatives, is covered by French confidentiality laws so it has not been made public. Yet it appears to accept, at least in part, Kerviel’s argument from the start. Namely, that his managers — many of whom quietly left the bank after the scandal — had turned a blind eye to his activities and even tacitly encouraged them, as long as his deals were profitable.
A lawyer for Kerviel, David Koubbi, said that Société Générale was ordered to compensate the former trader for damages, including the conditions of his departure as well as unused vacation days and other items that were part of his original employment contract.
The majority of Kerviel’s award — 300,000 euros (Rs2.27 crore) — represents a performance bonus for 2007. The sum was linked to a 1.4 billion euro (Rs10,600 crore) profit that the bank booked in the fourth quarter of that year from his rogue dealings.
“This is a huge victory,” Koubbi said. “It is recognising for the very first time that Société Générale knew everything about his activities, which is a very big thing.”
Société Générale, which lost 4.9 billion euros unwinding Kerviel’s trades in early 2008, said it would appeal the labour court’s ruling, which the bank dismissed as “incomprehensible” and “counter to the facts.”
The decision represents a potential legal turning point for Kerviel, 39, who was barred for life from working in financial services and who could still face billions of euros in damages to the bank.
France’s Court of Cassation in 2014 threw out a lower court’s order that he compensate Société Générale for the full 4.9 billion euros that it lost in the affair. It argued that the lower courts had failed to take proper account of the weaknesses in the bank’s own risk-management procedures at the time.