January 28, 2008
Last week Societe Generale, one of France’s largest bank announced that one of its traders caused the bank to lose $7 Billion. It is an astonishing number that is difficult to comprehend. This is without a doubt the largest fraud in banking history.
Societe Generale announced yesterday that it was selling $8 billion to raise capital for the bank.
The said trader, 31 year-old Jerome Kerviel was only a midlevel employee. He has been arrested and is being questioned by the police.
Many believe that it was impossible that Jerome acted alone. Some even believe, such as Elie Cohen, professor of economy and director of research at the National Center of Scientific Research (CNRS) that the bank is trying to cover its own loses by making the trader a scapegoat.
As expected, a full investigation is underway but apparently Mr. Kerviel did not personally profit from the fraud. He was just trying to cover up some earlier loses he had encountered. In his attempt to cover his original mistake he kept making greater and greater mistakes until they reached the astronomical amount of 7 Billion dollars.
We all are tempted to cover our mistakes and that is when we may cause the greatest damage both to ourselves and to others. Hopefully the financial consequences of our failings will not reach the billions!
We should be ready when we commit a mistake to face the music, even swallow our pride and we will earn the respect not only of others but more importantly of yourselves.
As Confucius said:
Be not ashamed of mistakes and thus make them crimes.