* Kerviel's risky bets cost Societe Generale billions
* Appeals court leaves him facing three years in jail
* Ruling quashes 4.9 bln euro fine, sets off new court
* New process will look at SocGen's share of blame
* SocGen tax exemption on losses could be affected-lawyer
(Adds comments from lawyers Mabrouk Sassi and Jean Veil)
By Lionel Laurent and Chine Labbé
PARIS, March 19 France's highest appeal court
upheld a three-year jail term for former Societe Generale
trader Jerome Kerviel on Wednesday but quashed the
giant fine he faced for making the risky bets that cost the
bank billions to unwind in 2008.
The Court of Cassation ruling upheld previous court verdicts
that said the 37-year-old former trader had acted alone, without
SocGen's knowledge, in building up huge positions of around 50
billion euros ($70 billion) that brought the bank to the brink
of collapse in the midst of the financial crisis.
However, the Court of Cassation also ruled that Kerviel was
no longer liable to pay SocGen 4.9 billion euros ($6.8 billion)
in civil damages to compensate the French bank for its losses,
saying that the last appeals verdict in 2012 had highlighted
SocGen's own risk-control failures, yet had not quantified their
share of the blame.
The size of the fine, which essentially meant the bank could
have had a lifetime claim on Kerviel's income, had caused an
outcry from the public and some politicians who saw it as
POSSIBLE TAX REPERCUSSIONS
A new civil trial is now due to take place at the Versailles
Appeals Court to decide on the eventual damages Kerviel should
pay and it is likely that SocGen, which according to the courts
was always a victim, will face further scrutiny over its risk
controls at the time of Kerviel's trades.
This may cost SocGen financially, according to one
independent lawyer. The bank was legally entitled to a 1.7
billion-euro tax deduction against Kerviel's losses, but if the
new trial apportions significant blame to the bank, it may find
itself facing a new tax bill.
"There may be repercussions for the tax situation," said
Mabrouk Sassi, a Paris-based lawyer specialising in tax and
"It will all depend on the figure attributed to SocGen's
responsibility. If it is marginal, say 5 percent of the losses,
it's not serious. But if it becomes half, then it's colossal.
The tax authorities will decide in the end."
SocGen's lawyer, Jean Veil, played down this possibility,
saying that the relevant fiscal jurisprudence would not apply.
Kerviel has spent three years fighting to overturn his
conviction for breach of trust, forgery and fraudulent data
manipulation. He has never denied masking his 50 billion euro
positions, but has accused his bosses of knowing what he was
doing. SocGen, meanwhile, insisted Kerviel had acted alone.
Kerviel and his lawyer David Koubbi have since February used
social media websites and traditional press outlets to portray
the looming verdict as one individual's struggle against high
finance, with Kerviel even meeting the Pope and embarking on a
march on foot from Rome to Paris.
Despite the upholding of the jail sentence, Kerviel told
reporters in the northern Italian town of Modena that the
quashing of the fine was good news.
"It's really great news. All I will say is that I am going
to continue walking," he said, dressed in red outdoor gear and
sporting a beard. "The fight goes on."
Koubbi also claimed victory and told reporters he would ask
the Versailles appeals court to investigate SocGen's conduct.
SocGen's lawyer, Jean Veil, disagreed, saying, "We do not at all
feel that we have lost this case."
Kerviel was originally convicted in 2010, and during a
retrial in 2012, Koubbi said his client had been a victim of a
conspiracy of "powerful" French elites.
But with little in the way of new "smoking-gun" evidence
from the defence team, the original appeals court sided with
SocGen and laid the blame exclusively at Kerviel's feet.
Kerviel's defence team said it would take from two weeks and
a month before the court officially notifies him of its ruling,
at which point he would have to start serving his sentence.
($1 = 0.7188 euros)
(Additional reporting by Antonio Denti; Editing by Mark
Heinrich and Greg Mahlich)