On a sun-baked dirt track in a northern Italian vineyard, a distant police siren can be heard. Jérôme Kerviel pauses to raise his head and look round. The siren could mean that, finally, six years after having run up €50bn in unauthorised trades, the former Société Générale employee will be on his way to prison.
“It could be this afternoon, it could be tomorrow, it could be next week or it could be when I cross the border into France,” says the 37-year-old, who last month lost a final appeal in France’s highest criminal court.
How the rogue trader arrived here in the rolling valley just 100km from the French border where we meet is a long story that he struggles to explain. In January, still waiting for the result of a protracted sequence of trials, appeal and sentencing, he had become so “fed up” that he considered suicide. Then, with support from Monsignor Jean-Michel di Falco Léandri, a prominent French bishop, he found himself at a public audience with the Pope. “It was incredible to meet the Pope. My mind was closed, and he found the key to open it and let the light in. It is difficult to put words to it.”
Inspired by this encounter, and by Pope Francis’s attack late last year on capitalism’s “idolatry of money”, Kerviel announced he would not return directly to Paris. Instead, the lapsed Catholic decided to walk home, marching the 1,400km in a reverse version of the Via Francigena, a medieval pilgrims’ route to Rome. He equipped himself with a bright red windbreaker, solid shoes and a GPS machine and set off, planning to live off donations from friends and strangers.
The aim of the walk, he says, is simple: “I want to promote the Pope’s message that the system is deeply flawed.” Indeed, to many in France, Kerviel has become a kind of working class anti-hero. His tale of human folly and deceit has inspired a fan club, a comic book called Le Journal de Jérôme Kerviel, and even a movie called Avis de Tempête (Storm Warning) which begins shooting next month. Kerviel may be guilty, say his supporters, but to them the working-class boy from Brittany is also a victim: not just of the powerful political and business establishment that portrayed him as a maverick offender but also of the malfunctioning financial culture that caused the 2008 crash. To them, he is the country kid who made a mockery of this system and almost brought down an entire bank.
“Don’t give up! All of Brittany and many others are behind you,” writes one supporter on Kerviel’s Facebook page. “Have courage, we are many and we are with you! We have the same desire to find a justice worthy of France!” adds another.
Sympathy is not universal. Le Figaro described his meeting with the Pope as a “lovely, desperate media stunt.” “Jérôme Kerviel is not Robin Hood. Jérôme Kerviel is the trader who lost the largest amount of money in the world,” said a SocGen employee in the first trial, a view shared by many, particularly those on the political right in France. And while the bank has been the focus of much criticism, even Kerviel’s hardiest sympathisers still have few illusions about what he did and how, through foolish betting of other people’s money, he put at risk an entire system.
Over the recent Easter weekend, I took the train from Paris to accompany Kerviel on a short stage of his peculiar pilgrimage. I had assumed I would be walking north towards Paris but, in fact, he had decided, four days from the French border, to turn south and head for Genoa. This would add at least 400km to his trip. He said it was to meet politicians there but I suspected he was delaying crossing the border to home as well.
At 10.30am, we set off, walking away from France, and along an ugly main road lined with scrapyards and quarries. Kerviel had acquired a traveller’s beard since he left Rome, as well as a deep tan. Lighting the first of many Winstons, and frequently looking awkwardly into his phone at the GPS coordinates, he recalls, in fluent French-accented English, how he broke into the world of finance.
He grew up in a small town in Brittany, where his father was a blacksmith and his mother was a hairdresser, before attending university in Nantes and Lyon, and emerging with a degree in economics and finance. In 2000, he joined Société Générale. The bank’s trading arm was expanding, and it was expected to make big money. “The atmosphere was aggressive, seriously aggressive,” he says.
His first job was in the middle office, entering trades for others and learning how the system works – and also how it could be manipulated. He worked hard to keep up with the young men from better schools, he says, getting in between 6am to 7am every day and leaving at midnight, giving up judo, his one hobby.
After five years he was promoted to junior trader and the first money he made for the bank was on the back of the terrorist attacks that struck London on July 7 2005. He made around €500,000 after having bet against shares of German insurer Allianz. “The boss came up to me and said, ‘Great job, Jérôme,’ which made me feel good,” he said. “But then five seconds later I look at the TV and see the blood and the dead bodies there in London . . . It was hard to take in. But my bosses said, ‘Forget your feelings, you know, leave your feelings outside the trading floor.’ ”
The praise from his superiors became his fuel. “I wanted that pat on the back, like anybody,” he said. Almost immediately he started cheating. Working on the trading desk, Delta One, his job was mainly to arbitrage small price differences between derivative contracts, not to take bets on market directions. But through fraud he could take large open positions. In 2005 he made €4m for the bank, above his target, and in 2006 €11m. “It was exciting to win more and more, you know. The boss comes over and says, ‘Jérôme, you are a cash machine.’ ”
It was after July 2007, when the financial crisis was starting to rout stock markets, that Kerviel’s initially modest gaming of the system started to get out of control. The economic situation was so bad, he thought, that the markets could only possibly go down from here, so why not bet big? He racked up a €28bn euro exposure in a few months, got the call right, and made the enormous sum of €1.4bn on his trading – although he declared only €55m as profit.
“At this point, no one was complaining,” he says. But hubris struck. At the start of 2008, he suddenly decided that the markets were set to rebound again, that the sell-off (which would last another year) was over. He built up a €50bn position, more than the value of the entire bank, this time betting stocks would rise. “I was confident, even though I was losing money, because I had always been right before,” he says.
In retrospect, he realises that at this point he had lost control. “It was just numbers on a screen. I was not even thinking in terms of money, just numbers of contracts . . . I had thousands, hundreds of thousands,” he says, pausing to check his phone, looking pained from both the story and the increasing strength of the sun. “The whole story is completely crazy. It was stupid. The atmosphere on the trading floor is completely unusual.”
Later that month the game was up. The final loss – €4.9bn – was announced to pandemonium. The bank’s share price tumbled, there was an emergency rights issue, the chief executive later resigned. Kerviel was eating breakfast at his brother’s house in Paris when he heard the news. He says he could not believe the loss was so enormous. “That day was a nightmare I could not wake up from. In fact, the last six years have been a nightmare I can’t wake up from,” he says.
Do you imagine we’d be talking if I made €4.9bn? Have you ever heard about any rogue trader that has won?
In court he admitted exceeding trading limits, faking documents, and entering false data into computers but said his bosses must have known what he was doing, and so he was really just a cog in a broken machine, an innocent in a twisted world. But if some of the public sympathised, the judges did not. In 2010 they ordered him not only to five years in prison – two suspended – but to repay SocGen the €4.9bn in damages.
It was probably this that piqued the national psyche. Kerviel would have to earn €100,000 a year – near his top salary at SocGen – every year for 49,000 years to pay back his former employer. Others simply could not believe he acted entirely alone, that nobody knew what he was doing. Jean-Luc Mélenchon, leader of the Left Front coalition, said the former trader was essentially innocent and a “victim of an all-powerful organisation that combines the resources of a bank and those of the state.” Eva Joly, French magistrate and former presidential candidate for the Green party, said: “It’s a case of how a bank can dominate a legal system, of how unequal things can really be.”
Kerviel’s appraisal of his situation is unflinching. “Think about my position. You have been condemned to pay €4.9bn, you have jail, you have the justice system against you. You have no life, few friends, no prospects. It’s difficult to rebuild any kind of real life with all that hanging over you,” he says.
We have gone off-road at this sombre point in the conversation, following a nearly dried-up river, all at the behest of his increasingly confused GPS machine. As the hours have ticked by, he has begun to limp. A large man in a dirty vest top pulls over his car on our dirt road and offers us a flower, and then takes it away again, saying something in Italian. Kerviel lights a cigarette.
He is becoming harder to talk to, more taciturn. He goes over the details of his case repeatedly but is reluctant to be drawn on other issues. He tells me the last book he read was a broadside by Jean-Luc Mélenchon, encouraging a citizens’ revolution against an oligarchic elite. I ask him if he saw the recent movie The Wolf of Wall Street. He replies: “I stopped watching it after one hour. I did not like it all.” I ask him, jokingly, whether his trading floor was like the one in the film. “They were stupid bets but not those kind of stupid bets.”
You have no life, few friends, no prospects. It’s difficult to rebuild with all that hanging over you
I raise the subject of psychology, mentioning perhaps the best known rogue trader, Nick Leeson, who in 1995 made an £830m loss, destroying the venerable Barings Bank in the process. Both Leeson and Kerviel, I say, were working-class men thrust into an elite world. Both worked in the back office, learning how to game the system before starting trading. Neither really made any money from the fraud, apart from a slightly bigger bonus, raising the question as to why they bothered to take the risk.
Kerviel hates these comparisons, bluntly rejecting the idea that he had some kind of working-class inferiority complex. “The people on the trading floors came from great to prestigious schools but I did not care.” He is convinced that rogue trading is common in all banks, that the whole system is broken. “Rogue trading happens all the time, it’s just that, if they lose, they quietly get fired. If they win, no one cares. Do you imagine we would be talking here if I made €4.9bn? Have you ever heard about any rogue trader that has won?”
Six years on from his crimes, he is convinced nothing has changed. “The culture is still exactly the same as it was before the crisis. All the people I know in this world tell me that.” He admits he does not speak to anyone at SocGen any more but points to rising bonuses, and the litany of legal cases popping up against banks, from Libor-fixing to sanctions violations.
At 3pm, after nearly five hours of walking, we arrive at a guest house, the Cascina Vrona. Over pasta, we share a cold beer in the shade and it is clear why he is in no hurry to get back to France. Italy is an adventure, taking his mind off the negative thoughts that otherwise cloud his brain. Pulled over by the police on the way to Siena for walking on a motorway, he was about to get a fine until he told the police about the €4.9bn in damages he already owed. “The guy totally exploded laughing and said, ‘OK, no fine for you, you can just go,’ ” says Kerviel, a rare smile cracking his weary face.
There is another reason for him to smile. When the courts last month rejected his final appeal on the criminal charges, meaning prison was now certain, they overturned the €4.9bn in damages, saying that there would be a civil case to decide on a new figure. This was to reflect the fact that SocGen was in some way responsible due to lax controls (they were given a €4m fine from regulators for missing the warning signs) and represents a change in case law. The damages are still likely to be impossibly large, and SocGen said that it never expected to collect it all anyway but Kerviel is hopeful this will turn the spotlight on to the bank rather than him for a change.
Until then, he is simply walking and hoping that he can keep walking. Only the occasional siren intrudes on his thoughts. “It’s such a pleasure out here. The sun and the countryside, I almost feel happy. I just really hope they will let me make it to Paris.”
Michael Stothard is the FT’s Paris correspondent
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