Top SocGen Officials Implicated In Money Laundering Investigation

by Ulrika Lomas, Tax-News.com, Brussels

16 January 2002

It was revealed on Monday that Daniel Bouton, Philippe Citerne, and Didier Alix, respectively the Chairman, CEO, and Chief of Retail Banking for Societe Generale, France's second largest retail bank, were being held for questioning in Paris as part of an investigation into an alleged money laundering network between France and Israel.

'We confirm that our Chairman, CEO, and the Chief Executive of Retail Banking are being questioned by the police in connection with an investigation into alleged money laundering,' a spokesman for the bank confirmed at the time. The three men were released from police custody on Tuesday night, and are permitted to carry on their duties as normal, but have been placed under formal investigation.

Societe Generale has denied that any of its banking staff knowingly took part in money laundering activities, and indeed there has been no suggestion by the investigating authorities that any of the bank officials questioned were intending to enrich themselves. Rather, according to reports, they are being questioned in their capacity as managers of the bank, over mismanagement of correspondent banking relationships.

According to French investigators, as far back as 1996, Societe Generale failed to report suspicious transactions whereby cheques drawn on French banks were endorsed in Israel and then cashed before being cleared through correspondent banking networks.

It is thought that the recent spate of high profile arrests in the French banking sector will lead to an urgent clarification of the country's anti-money laundering rules. However, experts believe that it is unlikely that the reputations of any of the banks implicated will be irreparably ruined as a result of the investigations.

'This is potentially embarrassing for them, but in my opinion it's unlikely to result in any prosecution,' Daniel Garrod, an analyst with Commerzbank Securities told the Bloomberg news service. 'It will probably lead to a review of anti-money laundering procedures at French banks, but is unlikely to have much impact on SocGen shares unless things go further.'

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