PwC finds control weaknesses at SocGen

A report by PricewaterhouseCoopers has pointed to problems in the design and
implementation of French bank Societe Generale’s control system.

‘Several key controls that could have identified fraudulent mechanisms were
lacking,’ the report stated, adding that the procedures linking the different
levels of checks were insufficient.

The chairman of the bank Daniel Bouton admitted that the bank’s internal
controls had faults.

‘The controls were carried out in accordance with the rules for each area

‘But “a horizontal method for assessing the risk of fraud, (and) a pooling of
the information, was missing.

‘It was the lack of this method that allowed Jerome K to play on the
different deficiencies, which his experience in the back-office had
enabled him to see,’ Bouton said.

The bank lost more than seven billion dollars earlier this year, which it
said were a result of rogue trading by Jerome Kerviel, AP reported.

Kerviel has since been charged with breach of trust, fabricating documents
and illegally accessing computers.

He is currently out on bail and has denied the charges, instead alleging that
his managers knew about his massive deals and that he has been made a scapegoat.

Related reading