Did Lehman Brothers Steal $8 Billion?

My Lehman story from last week has finally been picked up by the WSJ:

Lehman moved more than $8 billion between Lehman’s European headquarters in London and New York, where Lehman collects money from its global units and then disperses it daily.

On the Friday before Lehman filed for bankruptcy, Lehman’s London office was surprised to find that billions of dollars it expected in its accounts weren’t there, according to a person familiar with the situation. Lehman’s London insolvency administrator PricewaterhouseCoopers is seeking to have it repaid.

The issue took on political momentum over the weekend when U.K. Prime Minister Gordon Brown said he is working with U.S. authorities to get billions of dollars returned to the London unit…

While a large bank with offices around the world would be expected to transfer money among its operations, Lehman’s moves appear to go beyond that, people familiar with the matter said.

I suspect that at the margin, this provides an incentive for Barclays to do a deal to buy Lehman’s European operations — doing so might well preclude a lawsuit from any other potential owner, such as Nomura or PwC.

Note that the money was missing on the Friday before the bankruptcy, not the Monday after it. Lehman Brothers in the US looks as if it stole $8 billion from its own European operations even as it was still, technically, a going concern. If that’s true, Dick Fuld should be fired for cause rather than receiving a single penny from the $2.5 billion bonus pot. And in any case that bonus pot should certainly be spread among all Lehman employees, not just the ones in the US.

Update: Just found this: Bloomberg had much more detail on this story last Friday.

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