French police interrogate rogue-trader of the Societe-Generale

French rogue trader Jerome Kerviel gave his version of the USD 7 bln loss at Societe Generale he is accused of covering up as police decided Sunday whether to keep him in detention. The 31-year-old Kerviel was held for questioning on Saturday, two days after Societe Generale revealed the biggest ever fraud losses suffered in investment banking. Kerviel "presented himself voluntarily to police. He is still in custody. He is cooperating and is ready to explain himself," Jean-Michel Aldebert, head of the Paris prosecutor's finance section, told journalists late Saturday.

Kerviel arrived in a police van at the Paris police finance brigade headquarters on Saturday afternoon. He can be held for 24 hours but prosecutors can ask for a 24 hour extension. Police financial experts are reportedly poring over hundreds of thousands of share deals and hedges that Kerviel made over the past year, to see how he could have avoided detection by the bank.

Investigators went to the bank's headquarters on Friday and took away computer discs and other evidence. They also took away documents from Kerviel's apartment in a wealthy Paris suburb. Societe Generale has filed a criminal complaint against Kerviel alleging the use of falsified documents and unauthorised computer access.

The man's family and lawyer have insisted he is innocent. French trader Jerome Kerviel is described as a loner with a lacklustre resume who bears a slight resemblance to actor Tom Cruise. Colleagues quoted in the French press describe him as "a loner behind his computer screen" and nicknamed him "Tom Cruise" because of a slight resemblance to the "Top Gun" star. While the bank has faced mounting questions about how one junior dealer could have lost such a huge sum without being noticed, the case has stunned international markets already reeling from the US subprime mortgage crisis. Societe Generale has said it also lost two billion euros in subprime deals.

On an official visit to India, French President Nicolas Sarkozy called for greater "transparency" on financial markets.

He said the financial system had "lost sight of its purpose," denouncing operations which can produce "gigantic profits" as well as "gigantic losses" in a few hours.

The head of the European Central Bank, Jean-Claude Trichet, has called for tighter self-regulation by banks after the scandal. Societe Generale chairman Daniel Bouton has faced a storm of criticism over the case and he has been forced to deny that the bank had tried to hide losses from other bad deals in the Kerviel case.

The idea was "absurd" he told Le Figaro daily in an interview in which he compared Kerviel to an arsonist. "What happened at Societe Generale is certainly not a disaster that resulted from our strategy. It is more like an accidental fire which destroys a large factory at an industrial plant," Bouton said. Kerviel worked in the investment bank division, earning less than EUR 100,000 (USD 145,000) a year, moving from the middle office, which checked deals, to the front office trading desk in 2005.

Bank sources said his earlier job gave him knowledge of how to get round internal checks.

An advisor to the French president revealed that Kerviel had held positions of over EUR 50 bln on share futures — more than the bank's market capitalisation of EUR 35.9 bln.

The case dwarfs that of Nick Leeson, the original "rogue trader" who lost USD 1.5 bln at Barings, causing the failure of the British bank in 1995.

Spiegel-Online, the website of German weekly Der Spiegel, said Kerviel negotiated 140,000 contracts "a few weeks ago" on the Eurex derivatives market, a Swiss affiliate of the German bourse. With the DAX falling more than 600 points between the beginning of the year and January 18, Kerviel would have probably lost some two billion euros (USD 2.8 bln), Spiegel-Online said, quoting experts.It added that Societe Generale had been alerted by German sources. Described by work colleagues as a shy, hesitant character, Kerviel's resume depicts him as a judo and sailing fan who once ran for municipal office in his hometown of Pont l'Abbe in western France.

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