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Societe Generale's Chairman booed at AGM |
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Shareholders heckled and jeered management of French bank Societe Generale at its annual general meeting on Tuesday, taking them to task for the loss of billions blamed on a rogue trader.
Chairman Daniel Bouton, who has resisted heavy pressure to resign over the scandal, was booed down when he insisted that rogue trader Jerome Kerviel's multi-billion euro (dollars) trades were "concealed" from management.
"The employee was jailed but it is the bosses who should have gone," said one man to loud applause, charging that management had turned the bank into a "casino."
"We are grumblers and well, I am going to grumble," another shareholder told the board, whose reputation was shredded by the 4.9 billion euros (7.75 billion dollars) loss taken on Kerviel's market bets.
Kerviel spent 37 days in police detention before being freed on bail in mid-March, and awaits a possible trial over accusations of unauthorised transactions.
The trader has insisted that the bank's hierarchy could not have overlooked the scale of his positions, and allowed him a free hand to trade.
Bouton resisted political pressure to step down in the early days of the affair, and he again came under attack at the company's AGM, held in western Paris's La Defense business district and broadcast live on the group's website.
One shareholder attacked the bank's salary policy for encouraging risk-taking, saying that "when you set out the possibility of a huge bonus, you lower the honesty threshold.
Bouton rejected the charges and said the group remained one of the best-performing banks in Europe.
Bouton opened the meeting by saying that the 4.9 billion euro (7.75 billion dollar) loss taken on Kerviel's positions resulted from "an isolated operational risk.
"It does not fundamentally call into question the core of Societe Generale's market activities," he said, noting that seven officials had left the bank in the intervening period. Five of those were sacked. Two were dismissed on disciplinary grounds, three for under-performance, he specified.
"Mister chairman, I wonder who you take us for," retorted another shareholder who claimed to have been a customer of Societe Generale for 36 years."Who would you have believe that one can do those sort of things with impunity? Either this suited management at Societe Generale or else the controls (on traders) were non-existent," he said. "You speculated and that is all there is to it. It is you who are in the dock and Kerviel is just a puppet." The man said it "would have been easy to stop if you had wanted to or if you had proper controls in place." Shareholders had lost a lot of money, the shareholder said, calling on board members to forgo their directors' fees for 2007. Fees the previous year amounted to some 750,000 euros each.
Bouton tried to reply but he was booed down when he said that "all enquiries show that the trader's positions ... were concealed."
One shareholder, however, praised the chairman for his courage in coming to the meeting while another thanked him for preserving the bank's independence in the immediate aftermath of the scandal.
"I hope that we can now close once and for all this particularly difficult chapter for Societe Generale," Bouton said in a closing remarks.
An internal bank report released Friday found that Kerviel almost certainly had an accomplice in the huge deals he made and that managers were "negligent" in their oversight of the 31-year-old trader.
Another damning study by auditors PriceWaterhouseCoopers (PWC) described a flawed "general environment" at the bank that helped allow Kerviel rack up record-breaking losses. "This general environment weakened the control system.... Several key controls that could have identified fraudulent mechanisms were lacking," PWC said.
The value of shares had plummeted from 135 euros (213 dollars) in June 2007 to less than 67 euros.
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