Commentary on the following paper:
Ref. #CPA150
Title: Surveillance systems and control practices in digitized contexts
Authors: unknown
Abstract: not included
Argument and its development: The paper argues the existence of tensions and inconsistencies in the
evolution towards a digitized society (see 1. Introduction). These tensions and inconsistencies emerge
between surveillance systems and managerial control. Whereas the surveillance system, in a highly
digitized environment, is embedded in a real-time automatized monitoring which applies to the rhizomaticmultiple and mobile paradigm (Deleuze, 1990), the managerial control is still linked to the human
(manager’s) intermittent and hierarchical intervention which applies to the panoptical-enclosed metaphor
(Foucault, 1993).
The paper develops this argument through the analysis of a 2008 case of fraud by Jérome Kerveil (JK,
trader) at the Société Générale (SocGen) bank in France (starting from p. 8). The fraud regarded the bank
branch of Corporate and Investment Banking, Paris where JK covered the position of derivatives trader
(dealing with warrants, turbo-warrants, futures and forwards) at the desk Delta One (DO) listed products.
The fraud consisted in €49,9 billion unauthorized (fraudulent) trades (more than the bank total market
capitalization) made by JK on the futures.
According to the Author/s’ interpretation of the case (see 1. Introduction and 4.1. of the Discussion section,
‘Misalignment between control practices and control apparatuses’), the fraud of JK trader was perceivable
through the surveillance rhizomatic apparatuses of digitized and multiple information, but the managerial
control practices (applied by the desk manager Eric Cordelle, in the hierarchy of DO desk) lacked in spotting
the fraud for a time span of several months, because of
- a lack of understanding and expertise to analyze an overwhelming amount of data provided by the
digitized apparatuses (see p. 14),
- the JK’s practices to dissimulate the market risk of the unauthorized (fraudulent) positions taken on
the market through the recording of fictitious or false transactions, for the purpose of correcting
modeling bias of the digitized system or conceal the amount of earnings generated by the
unauthorized (fraudulent) positions (see pp. 8-9).
Although Eric Cordelle was not able to spot the fraud, the former DO desk manager of JK (Alain Declerk)
had noticed and reprimanded JK for the unauthorized positions taken between 2005 and 2007, but formal
actions were not taken.
Moreover, it seems that the multiple digitized systems were unable to block unauthorized positions
because a limit amount on the activity of the traders was never set up and as long as the traders produced
earnings and recouped their intraday (spiel) positions.
Commentary
The paper offers comprehensive technical insights into the bank trading operations of derivatives and how
the fraud was conceived and perpetrated by JK trader at SocGen, DO desk. The analysis extensively uses
primary and secondary sources (such as trials and interrogatories minutes and press releases containing
JK’s interviews) to reconstruct a coherent story telling. Unfortunately, this massive collection of data does
not seem to be sufficiently endorsed through the methodological section (see 3. Empirical analysis, p. 8).
Moreover, while developing an insightful theoretical framework (see 2. Theoretical background) on the
evolution of the panoptical metaphor towards the rizhomatic paradigm, the empirical analysis and the
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story telling do not completely support the argument of the paper, but offer diverse perspectives and the
possibility of other interpretative theoretical explanations.
I will develop my commentary following the given structure of the paper:
Introduction: it introduces a case (p. 1 JP Morgan Chase bank, called London Whale) which is not
the case analyzed in the paper (SocGen fraud by JK). Even if the introductory case is said to enhance
the understanding of the gap between digitized systems and manager’s control, its positioning in
the Introduction can create confusion with respect to SocGen fraud. JP Morgan also refers to
another time-frame with respect to the speculative bubble of 2008-2009 (it comes after, in 2012)
and it refers to another country-specific environment (UK). JP Morgan is used to shed light on a
cultural-type environment of risk-taking (p. 1 ‘after this episode, JP Morgan Chase was advised by
the US Fed to ‘continue to improve its risk management program’’) which is only secondary in the
development of the argument of this paper.
It would be preferable to reposition the JP Morgan case for discussion purposes at the end of the
empirical analysis of the actual case of SocGen fraud or erase it from the introduction.
Please provide references for the statement ‘Despites an increase interest for the deleuzian
concept of “control society”, management control research so far, has paid little attention to the
empirical study of the related implications for organisational control practices’ (p. 2).
The aim of the paper (p. 2. ‘this paper seek to remedy this oversight, through an empirical analysis
of managerial control practices, and their complex relation with digitized systems of surveillance.
Eschewing a conflation with surveillance systems (Brivot & Gendron, 2011), attention is instead
devoted to the practice of managerial control in digitized context can be made more
understandable’) can be made more understandable if the Author/s draw more explicitly on the
research questions they are going to develop through their analysis.
The Introduction (from p. 2) also contains a series of results based on the case to be analyzed and a
list of three contributions of the paper to the literature on managerial control, which I would have
expected in the final sections instead of the Introduction.
In terms of results, they appear to be multiple (e.g. p. 2. ‘The analysis of the SocGen case highlights
the problematic articulation between, on the one hand, the complexity and magnitude of data
made available by surveillance systems, and, on the other, the managerial control practices exerted
by the hierarchy and her incapacity to handle those data, leading to limited rules enforcement’, or
‘While control is supposed to be automatic within rhizomatic surveillance systems (Graham &
Wood, 2003), we found an inconsistency as the prevalent form of control practices in this case was
a direct supervision and social – peer to peer – control’, etc.)
However, a higher attention to the under-developed research questions would make these results
more understandable and the contributions to the literature should found more appropriate
discussion in the final section of the paper.
The development of the paper (last paragraph of the Introduction, p. 3) can be further detailed,
evidencing the structure given to the analysis of the SocGen case.
Theoretical background. The theoretical discussion is infused with various references which locate
the evolution towards the rhizomatic paradigm of Deleuze (1990) in a digitized society in a current
stream of the journal Critical Perspectives on Accounting.
A central aspect of the discussion is around the type of surveillance. Different features (namely
metaphor, apparatus and practices) are discussed for comparison and contrast between the
disciplinary regime (Foucault, 1993) and the control regime (Deleuze, 1990).
However, there are some points to be clarified:
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Table 1 should be repositioned at p. 7 where it is recalled in the main text. Moreover, the
table requires an in-depth explanation in the main text. The Author/s can choose to make
more explicit in their current discussion linking this discussion to the features identified in
the Table and source of the classification adopted.
Disciplinary versus control society are not explicitly mirrored in the empirical analysis
where the use of the same terms appear far more reductive (see Empirical Analysis).
The concept of enclosure (p. 4) is not appropriately reconstructed and it is referred to the
panoptical metaphor which only partially embodies the Foucauldian analysis of the
disciplinary regime.
The concept of enclosure is not even appropriately mirrored in the empirical analysis: the
relationship between JK and his desk manager remains inscribed within specified
boundaries. But even the role of the other controlling mechanisms (embodied by digitized
reports and further external/internal organs) is clearly defined and it does not appear to
open-up to a multitude of global rhizomatic surveillance.
I would contend that, in Foucault (1993), the use of the structural architecture of the
panopticon (which can be considered a tool or technique), actually serves a power-control
objective where the object and the subject of power are continuously mobilized. There is
the perception of a ‘central eye’ but, in the panopticon, prisoners and guards are, at the
same time, watchers and watched. The panopticon metaphor can actually be extended
through the mobile boundaries offered by the contemporary digitized systems, especially
in a situation, like the case SocGen where the main relationship is not played with
reference to a ‘central eye’ but between a watcher (desk manager) and a watched (JK
trader), plus other internal/external organs of control.
In the second last paragraph of the Theoretical framework, the study of a knowledge
management device is taken into account, but in the paper the discussion is not around
knowledge management but management control systems.
From the last paragraph of the Theoretical framework it seems that the actual analysis is
pivoted around surveillance apparatus (embodied by the digitized systems and the
external/internal organs of surveillance other than the desk manager) and managerial
control practices (embodied by the desk manager’s actions, reactions and ability to
understand and analyze the data provided by the digitized systems). This position, mirrored
by the empirical analysis, seems a bit simplistic and it does exclude the opportunity of
describing a management control system configuration as the intertwined set of
information and human practices for planning, controlling, monitoring and taking decisions
within an organization or in a defined area of responsibility and controllability.
I think that there is a potential of conceptual mistake and/or reductionist effort if the
separation of the data production (through digitized systems, implying multiple sources of
control) from the human intervention of the manager is interpreted as (or strictly
connected with) the control regime of Deleuze, on one hand, and the disciplinary system of
Foucault, on the other hand.
Empirical analysis. The first paragraph does not devote enough attention to the development and
description of the method of analysis. It only accounts for the sources used for the case SocGen,
without specifying what the Author/s are specifically searching for, in connection to their
underdeveloped research questions. This paragraph can be actually infused with some more
insights to clarify the specific concepts or constructs researched for comparing and contrasting the
foucauldian metaphor with the deleuzian paradigm, in the case SocGen.
The use of direct quotes is extensive in the empirical analysis and the Author/s’ comments and
voice do not appear frequently to address the reader’s attention towards the embraced theoretical
path.
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The sub-sections of the empirical analysis are sometimes disordered: section 3.1 introduces a
modality of managerial control by the former desk manager of JK who spotted his unauthorized
positions and it describes the actions taken, but more in-depths are identified later in section 3.3.1
where the managerial control practices are fully explained in terms of manager’s expertise, actions
and reactions.
Between sections 3.1 and 3.3.1, there is a section related to the surveillance apparatuses (3.2)
which does not seem to extend the mechanisms of control through the digitized systems, but
mainly constrained them to:
- three control authorities: EUREX, direction of ethics (SEGL/DEO) and FIMAT (p. 10),
- five signals from the accounting system: income level, level of cash flows, bridge processes
and report from the brokerage commission.
Indeed, the development of the interesting story telling around the fraud seems to divert the
reader’s attention from the signals produced through the digitized systems to the actual
ability/expertise of interpreting them, therefore, the balance of the analysis shifts on other two
directions:
- given the same amount of information provided by the digitized systems (any new
accounting system was introduced between the departure of the former desk manager of
JK and Eric Cordelle), the inability to spot JK unauthorized (fraudulent) positions was due to
the level of understanding and expertise of Eric Cordelle, which draws on the literature
about managerial skills and competences,
- a high risk-taking position was generally and culturally accepted in the bank trading of
derivatives as long as it was coupled with positive financial performances (p. 16, and p. 20
of the Discussion ‘SocGen members questioned during the trial insisted that they were
shocked because Kerviel had abused their trust, and not on the fact that he had violated
the formal rules or manipulated the systems’), which can be better explained through the
institutional literature. In turn, this culture prevents the digitized system to set up a limit
amount on the traders’ positions, leaving them open to discretion, which can be better
discussed in terms of Hopwood’s ‘visibility’.
Please amend the French quotes and translate them in English.
Discussion and Conclusion. A lot of effort is infused in the Discussion and Conclusion sections to
redirect the reader’s attention towards the adopted theoretical lenses. But this movement does not
appear linear or straightforward, especially after the story telling opening various possibilities of
interpretation.
Discussion and Conclusion are consistent with the theoretical framework but they are not
sufficiently supported by the empirical analysis and the general impression is that an ‘ad-hoc’
theoretical framework has been constructed at the beginning of the paper and recalled at the end,
without much attention to the ground breaking richness of the empirical analysis.
The issue of managerial competences and the management of the slacks (in this case the
unauthorized exercise of discretion by JK) would probably suits more the current analysis, leaving
room for a discussion on the specific characteristic of the risk-taking culture in the bank trading of
derivatives.
Thank you for such an interesting and challenging reading: hope these few notes would help this
work to disguise its full potential or clarify to the Author/s actual misunderstandings of their great
efforts.
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