By Nicola Clark & Katrin Bennhold
Feb 11, 2008
PARIS — The police investigating the trading scandal at Société Générale were moving on Sunday toward a theory that its rogue trader, whom the bank blames for losing it nearly $7.2 billion, might not have acted alone, as he and the bank have claimed.
The police have been sifting through nearly 2,000 pages of instant message traffic that the trader, Jérôme Kerviel, had sent. The police believe that he may have been trying to protect a friend who appears to have helped him cover his tracks — until one final, forged e-mail message made to look as if it had come from Deutsche Bank brought the case to light last month.
The instant message exchange adds to doubts about Société Générale’s explanation that Mr. Kerviel had engaged in the furtive trades alone, although lawyers say it does not necessarily weaken the bank’s assertion that there was no systemic fraud.
“There is a difference between a situation where two or more separate, isolated individuals cooperate with Kerviel and a situation where you have participation of his superiors, as he alleges,” said Christopher Mesnooh, an international business lawyer based in Paris.
Investigators suspect that Moussa Bakir, a 32-year-old broker at the futures brokerage Newedge, a subsidiary of Société Générale, sent Mr. Kerviel a forged e-mail message from Deutsche Bank, purporting to confirm a sizable trade in German DAX index futures that did not exist.
Late on the afternoon of Jan. 18, the day Société Générale says it uncovered roughly $74 billion worth of fictitious trades by Mr. Kerviel, Mr. Bakir indicated in a message exchange over the Reuters terminal system that he would send Mr. Kerviel documentation for an unspecified transaction.
“I’m sending you the conf,” Mr. Bakir wrote, using the shorthand for the confirmation of a trade.
Their messages — along with evidence that suggests they continued many of their conversations on cellphones — suggest that Mr. Bakir had an intimate knowledge of Mr. Kerviel’s surreptitious trading.
“They appear to have had a very close friendship,” the person said, adding that in many of their electronic messages there were also signals that they should continue their conversation on their cellphones.
Mobile phones are generally banned from bank trading rooms for security reasons.
One person with knowledge of the investigation said the police were trying to verify if the trade confirmation Mr. Bakir sent on Jan. 18 was the forged one Mr. Kerviel gave his supervisors to cover up an earlier mistake that had raised the suspicions of the bank’s compliance department.
Mr. Kerviel, this person said, had reported a large DAX futures trade that morning with a small German lender, Baader Bank, which would have required Baader to make a margin payment to Société Générale that would have exceeded Baader’s credit limit.
When questioned about the trade, Mr. Kerviel said he had made a mistake, and that the counterparty was actually Deutsche Bank. Mr. Kerviel was asked to provide proof that the trade with Deutsche Bank was genuine, this person said.
Later that afternoon, Mr. Kerviel presented compliance officers with the Deutsche Bank e-mail message. But when Société Générale double-checked, Deutsche Bank would not acknowledge the trade.
“We think this is the forged document from Deutsche Bank,” the person said of the confirmation referred to in Mr. Bakir’s message to Mr. Kerviel.
Mr. Bakir, who was arrested last week, was released on Saturday after 48 hours of questioning by French financial police, but he faces further questioning in the case.
A person with knowledge of the investigation said that, unlike Mr. Kerviel, Mr. Bakir had been less cooperative with police investigators.
Lawyers said his release suggested that he was considered a second-tier player compared with Mr. Kerviel.
One top Société Générale executive has told investigators that Mr. Kerviel rarely used his office e-mail account, sending no more than 60 messages over the last 12 months. But the transcripts showed that he actively used instant messaging.
The transcript suggests that Mr. Kerviel was aware of the gravity of his actions.
As early as October, when Mr. Kerviel’s trades were still profitable, their exchanges reflected signs of nervousness, according to excerpts, first published on the Web site of the magazine Le Nouvel Observateur on Saturday and confirmed by two people with knowledge of the investigation.
Christophe Reille, a spokesman for Mr. Kerviel’s lawyers, declined to comment on the transcript and described Mr. Kerviel’s relationship with Mr. Bakir as only “a professional one.”
Isabelle Montagne, a spokeswoman for the Paris prosecutor, said Mr. Bakir would be summoned again by two judges, but that no dates had been set.
A spokesman for Mr. Kerviel’s lawyer, Elisabeth Meyer, said they would file an appeal this week to have Mr. Kerviel released. He was placed in detention Friday for up to 12 months as the investigation continues.
Source: The New York Times
Theory Gains That Trader Had a Helper
