Kerviel says SocGen must have known of his trades

By Crispian Balmer

PARIS (Reuters) - The man at the center of a trading scandal at Societe Generale said that his activities could not have gone undetected by the French bank.

Trader Jerome Kerviel was questioned by police over the weekend after SocGen said he set up illicit positions that cost them 4.9 billion euros ($7.2 billion) to unwind in sinking markets last week.

Lengthy excerpts of the transcripts were printed by various French media, including mediapart.fr website and the website of Le Monde daily on Tuesday, and a judicial source contacted by Reuters confirmed the content.

Kerviel told police that at best there was systematic failure of computer and management controls.

A lawyer for the French bank questioned Kerviel's account.

"Mr Kerviel has accused a certain number of people, but he also recognizes having taken positions while covering up his tracks and in a way that is totally against the rules," Jean Viel told RTL radio.

According to the reported statement to police, Kerviel said he started hiding his trades in 2005 and had accumulated profits of 1.4 billion euros by the end of last year.

The sum was so huge that he counterbalanced it with fictitious, loss-making operations so as not to draw attention to himself.

"I cannot believe that my superiors did not realize the money I was committing (to the illicit trades). It was impossible to generate such profits with small positions," Kerviel said, according to the transcripts.

As a junior staffer, there were strict limits on the positions he could take, but SocGen has said he knew how to bypass these controls thanks to five years spent at the back and middle office of the bank at the start of his career.

Bank of France Governor Christian Noyer has dubbed him a "genius of fraud" and a "computer genius", but Kerviel painted a a more mundane reality.

"The techniques I used were not at all sophisticated. Any correctly installed system is capable of detecting these operations. There was no Machiavellian cunning on my part," he said, adding that he had only wanted to make money for SocGen.

Kerviel described a "mattress" system of subterfuge that allowed him to hide his trades -- including his 1.4 billion euro profit at the end of last year.

"Nobody had ever achieved that kind of profit before," he said, explaining that in the end he had massaged the figures to make it look like he had a profit of "just" 55 million euros.

He said his managers offered him a 300,000 euro bonus for 2007, but said he wanted double that.  Continued...