French banking chief arrested

Societe Generale president Daniel Bouton is under formal investigation

PARIS, France -- Daniel Bouton, president of the French bank Societe Generale, and two other bank executives have been arrested in a money-laundering inquiry.

Bouton and the other executives, Didier Alix and Philippe Citerne, appeared before an investigative judge, Isabelle Prevost-Desprez, late on Monday, court officials said.

They were placed under formal investigation -- one step short of being charged with a crime.

Under French law, the three could have been held for up to 48 hours without a warrant, but they were released late on Monday.

Six Societe Generale employees have already been placed under formal investigation in the affair.

The investigation centres on whether scores of cheques written in France against bogus accounts were cashed in Israel or the Palestinian territories, often passing through Germany en route.

French justice officials are concerned that banks failed to report suspicious transactions.

A statement by the bank said: "Societe Generale confirms that several of its senior executives and managers have been held for questioning in connection with the investigation by a French judge of alleged money-laundering.

"The investigation concerns cheques presented to Societe Generale by foreign banks for cashing by various French banks.

"The questioning and investigation involve managers of the bank's central banking cheque-processing services, antimoney-laundering department and three members of the Group's general management committee.

"The extent of the inquiry and other measures, which follow similar investigation of other banks, would indicate that investigators question the existing process by which cheques are presented by foreign banks for payment by French banks, with regard to antimoney-laundering obligations.

"Societe Generale rigorously respects its legal obligations and implements the appropriate procedures and means to prevent check processing from being used for money-laundering purposes. Societe Generale has always actively and fully co-operated with the relevant authorities.

"Neither Societe Generale nor its employees have knowingly participated in any money-laundering transaction. Societe Generale renews its confidence in the persons under investigation and assures their defence."

The alleged scheme came to light in 1997 when seven banks, including Societe Generale, filed complaints against some of those suspected of involvement.

The widening probe is believed to be part of the "Sentier Affair," named after the rag-trade district of Paris, where the alleged money-laundering ring is believed to have originated. Two French judges, Isabelle Prevot-Deprez and Philippe Courroye, have been investigating the ring since 1998.