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Not Quite Stavisky, But “Une Fraude Massive”…

  • January 25th, 2008
  • Posted by 7thmin

alexandre-stavisky-sarkozystaninfo.jpgAn event unlikely to help confidence in the financial business at a difficult time, fraud by a trader inside France’s second main bank, La Societe Generale, has cost it EU4.9-billion( $US7-billion, A$8-billion; dcerates.com, 24.1.08).

The Banque de France has started an inquiry after routine checks on Sunday revealed the misappropriation of EU 40-50-million (A$67-84-million).

Societe Generale announced that in the context of its losses over the “sub prime” credit crisis of recent weeks, fraudulent acts by the officer had cost it $US7-billion. A further EU2.05-billion (A$3.4-billion) was directly attributable to “sub-prime” losses.

It said the trader had set up a “hidden position” to conduct fake transactions while handling futures contracts on European share markets, over two or three years.

He had avoided detection because of inside knowledge of the bank’s checking processes.

While it has been seeking credit guarantees to help overcome the crisis, Societe Generale insists its own solvency is not under threat.

The crime is being described as the biggest theft ever by an individual person, and it was announced, somehow redundantly, that the accused perpetrator, a French man in his thirties, had been suspended pending the sack.

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In the meantime European share markets opened sharply up on Thursday (24.1.08), prices rising by over 4% in London, Frankfurt and Paris – moving to catch up with recoveries on American, Australian and Asian markets.

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Unmasking of the embezzler Alexandre Stavisky in 1934 aggravated financial crisis and political instability in Depression-era France.

Reference:

BBC, “Rogue trader costs French bank $7-billion”, 24.1.08. www.bbc.com, (24.1.08).

Le Monde, “La Banque de France ouvre une enquête sur une fraude massive à la Société générale” (The Bank of France opens an inquiry into a massive fraud at Societe Generale), 24.1.08. www.lemonde.fr, (24.1.08).

Picture: Stavisky, google – sarkozystan.info

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