French bank accuses trader of evading controls to bet billions

The man accused of orchestrating one of the biggest banking frauds in history hacked computers and falsified documents to cover his tracks, a French bank alleged as investigators questioned the futures trader for a second day.

Jrme Kerviel, 31, was placed in custody in Paris on Saturday after reporting to authorities. Asthe interrogation continued Sunday, French police extended his custody for another 24 hours. They were to decide on Monday afternoon whether to charge or release him.

Kerviel was working for France's second-largest bank, Socit Gnrale, which claims it lost about $7.2 billion because of his unauthorized trading on Europeanfinancial markets.

He had been investing the bank's money by hedging on equity-market indices, meaning he bet on how the markets would perform at a future date.

Socit Gnrale alleged in a five-page document on Sunday that Kerviel hedged his positions with fictitious trades, and then faked e-mails and documents to back them up. He also chose trades that didn't require margin calls or confirmation, the statement said.

In the document, the bank also sought to counter the notion that it had disrupted markets by hurriedly selling off the massive positions that Kerviel allegedly built up without authorization.

The bank took three days last week to sell off the contracts on the Eurostoxx, DAX and FTSE indices, but said it had done so in a "controlled" way.

"He had a very good understanding of all of Socit Gnrale's processing and control procedures," the statement said.

The bank said Kerviel had built up a position worth some $73.5 billion US, which was eventually closed or hedged by last Wednesday with a loss of $7.21 billion.

The bank said Kerviel did not appear to have profited personally from the transactions and seemingly worked alone, a version of eventsrepeated Sunday by Jean-Pierre Mustier, chief executive of the bank's corporate and investment banking arm.

But, in a conference call with reporters, Mustier added: "I cannot guarantee to you 100 per cent that there was no complicity."