SocGen Says Trader Seeking $9 Million Cost $267 Million in Fines

(Bloomberg) -- Societe Generale SA said a former trader who insists he was made a scapegoat for the bank’s role in a rate-rigging scandal should face up to criminal charges in the U.K. before a Paris court rules on his bid for more than $9 million in compensation.

The French lender disputed Stephane Esper’s lawsuit at a Monday hearing, saying that employment tribunal judges should hold fire on delivering a decision about the former trader’s claim to avoid prejudging a U.K. probe in which he faces criminal charges over related facts. Esper has refused to go to Britain, arguing he wouldn’t get a fair trial.

Lionel Vuidard, a lawyer for SocGen, said he was in disbelief at the size of Esper’s demands given that another investigation into Euribor-manipulation allegations run by the European Commission led to the bank being fined about $267 million all because of his actions.

“The bank has already had to pay” millions of euros “for acts of manipulation that, according to the investigation, were committed by Esper,” Vuidard told Paris employment tribunal judges, referring to the EU fine issued in Euros. “Now, he’s requesting 8 million euros ($9.4 million). That’s a bit strong.”

EU Decision

While Esper’s name doesn’t officially come up in the EU’s fining decision, the Frenchman was among 11 traders the U.K.’s Serious Fraud Office accused in 2015 of conspiring to rig the euro interbank offered rate, or Euribor. But the London trial, which eventually took place earlier this year, fell short of British prosecutors’ expectations: only four defendants appeared in court and none of them were found guilty.

Courts in France and Germany blocked the extradition of Esper and four former Deutsche Bank AG employees. Days before the start of the London court case, former Barclays Plc trader Philippe Moryoussef said he wouldn’t appear and was seeking refuge in France, with his lawyer justifying this decision by saying he was unlikely to get a fair trial.

Alexia Boursier, Esper’s lawyer, told Paris judges on Monday that her client should be defended by Societe Generale in proceedings against him as the allegations relate to actions he undertook as part of his duties at the bank.

Instead, she said, the bank has consistently refused to do so and designated him as the sole person responsible in the so-called Euribor scandal via a December 2013 press release where his identity could easily be recognized.

‘Perfect Scapegoat’

“He was the perfect scapegoat” given that he’d left the bank already by then, Esper’s lawyer said. “To contain the fire, the bank chose to designate one culprit.”

Before he left Societe Generale in 2009, Esper worked in Paris as a trader of European interest-rate swaps. Prosecutors in the British trial said Esper was part of the conspiracy to influence Euribor submitters to adjust their rate entries to benefit their trading positions, but he was only referred to occasionally.

Boursier said Esper’s career in finance is ruined and he lives with the constant threat of being arrested.

She said the French bank should be made to pay millions of euros in damages to make up for the professional and psychological harm it caused in addition to covering his legal fees to fight the U.K. criminal case. She provided the employment tribunal a 2 million-pound ($2.6 million) quote a law firm drew up to cover its fees during the entire U.K. procedure.


‘Extravagant’ Demands

Vuidard expressed his frustration at Esper’s “extravagant” demands.

“This victimization posture that suggests Societe Generale, because it’s a bank, is necessarily wrong has to stop,” he said. “Esper is trying to hide the frailty of his legal argument by trying to put Societe Generale on trial here at the employment tribunal. But the only trial that matters is the criminal trial” in the U.K.

Paris employment tribunal judges are set to rule in the Esper case on Oct. 30. Representatives for Societe Generale declined to comment on the Esper lawsuit.

In the U.K. criminal trial, prosecutors only managed in mid July to secure a conviction for Moryoussef and former Deutsche Bank trader Christian Bittar pleaded guilty in the case. The British jury was unable to reach a verdict on three of Moryoussef’s former colleagues on trial, while a Deutsche Bank executive was cleared. Esper’s extradition was blocked last year, saying the conduct wasn’t illegal in France when it occurred about a decade ago.

Esper’s lack of funds to cover the legal fees he’d incur in the U.K. aren’t the only reason he considers he wouldn’t get a fair trial in the U.K. Boursier also said SocGen has misled British prosecutors and prevented her client from defending himself effectively by providing only accusatory evidence to the U.K. procedure -- an allegation Vuidard disputed.

In these circumstances, the British case concerning Esper is therefore “frozen,” Esper’s lawyer said. Agreeing to push back ruling on his employment lawsuit until the criminal case is over “is like postponing indefinitely” an examination of his demands, she said.

Vuidard put the ball in Esper’s court. It’s up to him to face the charges in the U.K. in order to be cleared or convicted, the SocGen lawyer said.

“We have nothing to do with Stephane Esper’s strategy to refuse to set foot in the U.K.,” Vuidard said. “He’s afraid he will get convicted. That’s why he’s refusing to face up to the criminal judge.”

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