Tag Archives: fantasy

Kerviel: The Sorcerer’s Apprentice?

Fraudster or non fraudster?

I normally concentrate on fraud perpetrated by executives but this exceptional story needs to have some of the research findings from my doctoral work (2010) applied to make some sense of the situation with accusations flying from all quarters.

Jerome Kerviel. Photo from:http://picses.eu/image/cd35ab46/

Kerviel‘s status qualifies in being a manager of resources and not people. The argument is that Kerviel cannot be a fraudster is that he received no monetary gain out of the massive transactions, although he would have gained a good bonus that year. The French tribunal ruled that this was not a case of fraud. But despite his seemingly altruistic motives of helping the bank to make money, he nevertheless nearly brought down Societe Generale in the process.

The case analysis and verdict.

Malevolent non-fraudsters as well as fraudsters lie. It is reported that he used fictitious emails and fake trades and lied to his senior managers about his losses. But was he a fraudster in fact?

The counter accusations are: that there is scepticism in the banking community that he did this on his own (in cahoots with other fraudsters); that he was a scapegoat for the bank’s own losses of the previous quarter (attributed fraudster) and that he has received cult status for having to put his career on the line as he was only doing his job of making money in the markets (non-fraudster).

From the information that is freely available on the internet, I have come to the conclusion that most likely Kerviel was an ‘Inferior Malevolent’ fraudster-in-the-making. This conclusion is based on:

  1. Kerviel was doing this rogue trading out of a sense of trying to impress his superiors
  2. He was quiet and introverted, and it is reported that he was liked by neighbours.
  3. “His father, who taught apprentices boilermaking in a local training centre, died less than a year ago.” (Jan 2008)
  4. He lost the woman whom he was going to marry about the same time.
  5. These two losses coincide with the beginning of his fictitious emails covering the trades
  6. He lived in a fantasy world where he existed as the Master Trader, duplicating massive amount of trades every 3 days as the losses grew.
  7. It takes a fair amount of time for this type of fraudster to develop; Kerviel’s activity was cut short after one year.

Although Kerviel did not profit directly from the trading at the point he was discovered it is my belief that he fits the profile of what respondents called in their interviews as the ‘Likeable’ fraudster. This type is quiet, friendly and liked by many. However, it takes a deep family crisis to erupt to spur them into the fraudulent activity and they see that the only way out was to gamble with their company’s money to feed his image of the successful trader. His only solution was gaining money in trades to offset his extremely low self image, and he used the bank’s money to do so.

Fraud investigators note: the Likeable Fraudster is the only type that fits with the Cressy Fraud Triangle (1973 Other people’s money: A study in the social psychology of embezzlement. Montclair, N.J.: Patterson-Smith.)

As a shocked neighbour who had known Kerviel since he was a baby reported: “The two things happening at the same time must have been why everything went wrong.” (2008)

The double losses were replicated in his trading, but this was NOT his intention, he wanted to impress his bosses with large earnings. He came from a different and lower echelon of French society – possibly his managers were seen as father figures to him. That of course is up to the psychologists to say and not my area of expertise. Likeable Fraudsters, are also noted in my research for becoming suicidal upon discovery, which is exactly what happened to young Jerome Kerviel.

It was with considerable luck that Societe Generale discovered the losses when they did, as he was unstoppable and would have continued literally until there was no money left in the bank but earning on the way very large bonuses.

Sorcerer’s Apprentice. Photo from: G.B. Ward’s website:http://brainrender.com/gallery/main.php?g2_itemId=353

It is quite clear that the Guardian Angel profiling (Sheridan 2010) would have picked up Kerviel before the major losses. The bank should have completed some pre-employment screening, however he came straight from University and had no work history. These applicants are typical of ones that slip through the normal background screening cracks, and Kerviel’s case demonstrates clearly that thorough screening must take place on an annual basis with key personnel, such as traders and financiers.

Under my assessment profiling, it would have been pointed out to senior management that Kerviel was at risk, and all that was needed was some spot audits on their part to verify and the whole scam would have unravelled.

It is now up to other banks to heed the lesson that Societe Generale learnt so painfully and nearly went broke in the process of Kerviel’s frenzied activity – just like Mickey Mouse did in the Fantasia version of the tale.

Leave a comment

Filed under Creating successful image, Likeable Fraudster, No monetary gain, Rogue trading

‘Delusional’ Senior Accountant, Sonya Causer Stole $20M

From News.com.au website: By Michelle Draper  From: AAP August 19, 2010

“A Melbourne mother who fancied herself as a property guru embezzled almost $20 million from white goods retailer Clive Peeters in one of the largest thefts of its kind in Australia

Sonya Causer was a senior accountant at the head office when she withdrew more than $19 million from the company’s main account between 2007 and 2009 and used it to buy 44 properties.

Sonya Causer. Photo from: http://www.connectedaustralia.com/News/BreakingNews/tabid/119/ArticleId/3925/

Causer pleaded guilty to 24 counts of theft. Today Causer, was jailed for eight years. She also splashed $110,000 on two cars and a motorbike for herself and her husband, while $17,000 was spent on jewellery. But the majority of the funds were funneled into the properties, which Causer, 39, then leased out. In her police record of interview, Causer explained that she became obsessed with buying and selling real estate. “She said it was never about the money, rather it was about the negotiations and dealing with the real estate agents,” Prosecutor Peter Kidd told an earlier hearing.

In sentencing, Justice John Forrest said he accepted Causer suffered from a delusional disorder and regarded herself as a “property wizard”. He said Causer’s job pressures, marriage problems and the stress associated with raising two young children suffering from autism contributed to her fraud. “There was an element of depression generated by your circumstances which played a part in this delusion that you were a property guru,” Justice Forrest said. He said Causer’s theft contributed to the collapse of Clive Peeters, which was placed in administration in May, but was not the primary cause. [At the time Clive Peeters said its operating loss for the three months to March 31 was expected to be $4.5 million compared with a loss of $600,000 for the same period the previous year. The company employed 1300 staff members in 44 stores across Australia and was placed in administration.]

About $16 million of the misappropriated funds have been recovered, leaving a $3 million shortfall. Causer sold the family home to repay some of the stolen funds and had been living in rental accommodation, the court heard. Justice Forrest said while Causer pleaded guilty at the earliest opportunity, cooperated with police and helped recover the stolen funds, her crimes were sophisticated and involved a degree of planning.
“The scale of your embezzlement is significant. For a period of two years, month in month out, you grossly abused the trust of your employer,” he said. “From beginning to end this was a plan of some sophistication over a lengthy period.” Justice Forrest said it was necessary to send a message to all those in a position of trust handling large or small sums of money, that dishonest dealings with those funds must be punished significantly.

She must serve five years before being eligible for parole.”


This case is unfortunately a good example of the ‘Likeable Fraudster’, so named in my research (2010), of a particular type of fraudster who has difficulties in the past. They are like timebombs, ticking away to be  set off or detonated by present pressures.

Case study questions

Q. 1. Would you hire this type of person in your accounts department?

No? Well, this will appear as bit of a shock to you as someone did, AFTER Causer had been dismissed and charged for the 24 offences:

“It appears that Causer, who applied for a position as an accountant with the medical product company ITL, used the name Sonya Dollman and omitted the details of her employment with Clive Peeters. It was less than a fortnight ago that ITL CEO Brian Andrews became aware of her background and she was dismissed. Andrews told the media that she had breached company policy by not disclosing that she had been convicted of an offence (although at the time of applying, Causer hadn’t been convicted). Andrews added that he would now review the company’s hiring process.”           By Claire Moffat, http://www.connectedaustralia.com/News/BreakingNews/tabid/119/ArticleId/3925/Sonya-Causer-hired-again-as-accountant.aspx

Q.2 Does your company pre-screen employees as they enter your firm?

Find a good investigative background screening company who can check in-depth the previous employment of a candidate. We work with ORNA (www.orna.com.au) who provide us with accurate information about a person’s past. But we also do intensive screening for senior positions, (http://www.guardianangelexecutives.com). Sadly some screeners and HR departments only go as far as what is put in front of them in terms of names etc, but a thorough check, for instance of Causer’s residence and the electoral rolls, would have exposed her disguise.

Q. 3 Did you know that almost all of the fraudsters arrested in my study worked in different companies (and continued to defraud) while they were waiting for trial?

No? Well that’s the reason for pre-screening all candidates, as they do this and do not seem perturbed that they have been charged for fraud. Take background screening seriously and this risk will be reduced substantially. Use executive profiling for key personnel.

Q. 4 Did the company fail in its duty of care with a senior manager who was for 2 years displaying ‘odd’ behaviour?

After all, are we not charged as transformational managers to influence subordinates attitudes and assumptions and build commitment to the company’s mission and strategies? (Yukl, G., 1989. Managerial leadership: A review of theory and research. Journal of Management 15 (2): 251-289)?

I am not condoning her behaviour however the context of mother with two autistic children, drug addict husband plus senior management duties surely should have called someone’s attention to her plight? To take this argument further, read Martin Parker’s provocative article (Parker, M. 1998. Organisation, Community and Utopia. Studies in Cultures, Organizations & Societies 4 (1): 71-91) where he challenges that businesses who seemingly ‘care’ are creating delusional thoughts in their workers (false consciousness) in terms of their labour being respected and valued. If they do not truly care then this: “…means being against an unarguable collective good and standing for selfishness, individualism, fragmentation and the denial of common value.”

We are left with the final unanswered question that is based on business morality: Did the company Clive Peeters get what they deserved?

Leave a comment

Filed under Creating successful image, Likeable Fraudster