What The Auditors Saw – An Update on Société Générale
Prentice: It’s a fascinating theory, sir, and cleverly put together. Does it tie in with known facts?
Rance: That need not cause us undue anxiety. Civilizations have been founded and maintained on theories which refused to obey fact.
“What The Butler Saw”
Joe Orton, 1969
PARIS: Jérôme Kerviel, blamed by Société Générale for the record trading loss it took this year, met Monday with accountants from Ernst & Young and Deloitte Touche Tohmatsu to ask about alerts they may have sent to the bank.
The meeting focused on how much auditors had known and told the bank about its exposure to what became €50 billion, or $68 billion, in unauthorized futures positions that cost Société Générale €4.9 billion to unravel in January.
The bank’s assertions that it had not known know about Kerviel’s activities are “a smoke screen,” Bernard Benaiem, a lawyer for Kerviel, said before entering the interview in the offices of judges leading the investigation. “E-mail exchanges from their auditors kept them aware that the trades didn’t exist.”
The lawyers for Kerviel also planned to ask about the findings of the French banking commission in the case. The commission fined Société Générale €4 million in July for failing to comply with rules on internal controls. The report, which was not made public, was recently shared with Kerviel’s legal team.
The auditors’ evidence is “of no concern” to the criminal case against Kerviel, a Société Générale lawyer, Jean Veil, said during a break in the proceedings Monday. The bank’s legal team also represented the auditors at the meeting.
I have never believed the supposed “fraud” was unknown to SocGen’s senior management and CPAs. This story stinks as much as the “official” Joe Jett line from GE and the SEC. We are no better than the French.