London Briefing Fiona WalshLess than a week ago Société Générale sent shockwaves through the already fragile financial markets with the revelation of the world's biggest banking fraud. Things looked pretty bad for the French bank then - and they are getting worse by the day.
From the start, nothing quite seemed to add up about the incredible story of the lone rogue trader who, we were told, managed to run up an exposure of €50 billion in secret, unauthorised trades on the equity derivatives markets.
Cast as a shy, fragile loner who was recovering from the tragic death of his father and the break-up of a relationship, Jérôme Kerviel (31) was, proclaimed SocGen executive chairman Daniel Bouton, "a genius of fraud".
Or not, as it would now appear. Investigating judges have already thrown out the most serious charge - attempted fraud - against Kerviel, who has been released on bail.
He still faces charges of breach of trust, falsifying documents and breaching IT controls, all of which he already appears to have admitted to. In short, he is in a lot of trouble - although not, perhaps, quite as much as his former employer now looks to be in.
France's second-largest bank last week cast itself as the innocent victim of a brilliant financial fraudster, boasting of its boldness and efficiency as it took a near-€5 billion loss in unwinding the trades.
But the more detail that is revealed - and there is plenty more to come - the more this pillar of the French financial establishment seems to have bungled things badly.
Not only does Kerviel, the former backroom boy, appear to have embarked on his fictitious trading spree as long ago as 2005, but it has also emerged that SocGen was warned about his trading late last year. According to the
Paris public prosecutor, questions over some of Kerviel's trading positions were raised in November by the European derivatives exchange, Eurex.
Even if Kerviel was a master of the cover-up, that surely should have sparked an internal investigation of sufficient rigour to reveal that all was not well.
After rogue trader Nick Leeson brought down Barings Bank in 1995, financial institutions around the world scrambled to strengthen their defences against similar incidents. It was never supposed to happen again and, at almost five times the size of the Leeson fraud, certainly not on this scale.
From the first revelation of the black hole at the heart of SocGen last Thursday the bank's attitude came across as the equivalent of a Gallic shrug: this was a junior trader, he covered his moves up well, so how could we have been expected to discover anything?
As SocGen and its senior executives - Bouton and Jean-Pierre Mustier, head of the investment banking side - are rapidly discovering, that simply is not good enough. They are coming under increasing criticism for their handling of the affair, which many observers believe will leave the group vulnerable to a takeover bid.
Kerviel's lawyers accuse SocGen of throwing their client to the dogs and claim that other employees at the bank regularly traded beyond their limits.
Christian Noyer, the governor of the Bank of France, is also coming under criticism for his failure to inform the French government of the SocGen scandal. French prime minister François Fillon found out about it four days after other authorities were alerted and after the positions had been unwound - a massive market operation which may have played a part in the wild movements of world equities early last week.
The decision not to inform the French government, together with the failure to alert authorities in other countries, such as the US Federal Reserve or the Bank of England, has won SocGen and the French central bank few friends in this crisis.
Noyer appeared on French radio earlier this week to explain his decision to keep the lid on the losses. In what can only be interpreted as an astonishing snub to his political masters, he said he had kept silent "to avoid any leaks".
Shareholders in SocGen are equally unimpressed and about 100 of them plan to sue the bank for market manipulation and insider trading. Questions are also being raised about a sizeable share sale by a main board director just days before the scandal came to light.
The sheer scale of the trading loss at SocGen and the mystery surrounding it has captured the public imagination across the world.
The hapless Kerviel, who has not been seen in public since the story broke, has become something of an anti-hero on the internet - he may have had his Facebook page removed, but thousands have flocked to his support.
Some credit the trader with at last achieving a world record in finance for the French, while others say he should be awarded the Nobel prize for economics.
Bookie Ladbrokes is even offering odds on who should play him in the inevitable film version of events, with French actor Olivier Martinez currently leading the pack at 3/1. At 50/1 is the original rogue trader himself, Nick Leeson.
Fiona Walsh writes for the Guardian newspaper in London
