PARIS (AFP) — Profit-crazed traders, controllers out of their depth and executives who turn a blind eye: a former inspector at Societe Generale paints a damning picture of trading room anarchy at the scandal-hit bank.
Maxime Legrand worked as an inspector of trading operations at Societe Generale from 2001 to 2004, leaving a year before rogue trader Jerome Kerviel joined its trading desk in Paris.
Reporting directly to Chairman Daniel Bouton, he was part of a team that carried out risk assessment spot checks, in addition to the regular controls conducted by the so-called back office.
"The 70 to 100 risk hunters are a little bit like 'his' own team," Legrand told AFP.
Once a year, Bouton -- who is in the firing line over the 4.8-billion-euro (7.0-billion-dollar) losses the bank has blamed on Kerviel -- would summon the inspectors for a risk assessment review, Legrand said.
"Every year he used to give us a dressing-down, saying that each time there had been a risk we had not spotted it. He knows he has an inspections body that doesn't see risks, and he does nothing about it."
"Since inspectors do not have enough power in the bank, we are not given the time we need, or the means to check things out," he said.
"We pretend to have an inspection just to please the banking commission," Legrand charged. "That's where the hypocrisy lies with Societe Generale's management: everyone knows about all of this."
A spokeswoman for Societe Generale, asked to comment on the allegations, said: "The remarks made by Maxime Legrand are defamatory and his motives are of a personal nature."
Societe Generale accuses Kerviel of circumventing internal controls with stolen computer access codes and fictitious documents, to place more than 50 billion euros in unauthorised futures trades.
But in an interview with AFP on Tuesday, his first since the bank revealed its losses on January 24, Kerviel said he was only partly to blame for the bank's losses.
"I accept my share of responsibility but I will not be made a scapegoat for Societe Generale," said the trader, who has been charged with breach of trust, using false documents and unauthorised computer access.
The trader has suggested his bosses turned a blind eye to his rogue dealing as long as he was turning a profit.
"Traders are pushed to make a lot of money, so there is a very short-termist culture ... where they don't want to be bothered by inspectors and controllers," Legrand said.
"There are quite certainly a number of traders who did not follow risk control instructions and who went unpunished even when their offences were discovered, because they were earning money for the bank," he said.
According to Legrand, the problem stemmed from the calibre of recruits: the typical bank inspector at Societe Generale, he says, was "fresh out of school" and "didn't know much about traders."
"The guys just aren't up to the job," he claimed. "I, personally, didn't have the skills to detect exactly what risks there could be."
"Working in a trading room is a very specialised skill... Any trader will tell you that (inspectors) sometimes do a pretty approximative job," said Legrand, who is currently working on a doctorate in economics.
"When I was an inspector, the old traders would almost throw out by the seat of their pants inspection chiefs with five or six months' experience, saying: 'Come back when you have something intelligent to ask me.'"
Legrand, who left the bank to work as an adviser to the Paris regional council, insists he has "no animosity towards Societe Generale."
But he said, "I had had enough of seeing that inspection reports served no purpose except to be filed away by the banking commission."
He claimed similar problems applied to the auditors charged with certifying the company's accounts.
"The guys are not skilled enough. And the job is not always given to the brightest sparks," he said.
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