What’s left of Lehman Brothers yesterday accused Barclays Capital of gaming the crisis to get a $8.2 billion “windfall profit” when it took control of much of Lehman’s U.S. business a year ago.
According to Lehman, certain Lehman executives agreed to give Barclays an undisclosed $5 billion discount off the book value of securities transferred to Barclays. Later they agreed to give billions more in so-called additional value that the court never approved, Barclays said in court papers filed yesterday.
Back in May, Lehman first raised these objections after Barclays was able to quickly book a $4.2 billion gain on its $1.75 billion purchase. How could it do that if it didn’t take advantage of the crisis situation to pick up additional assets on the cheap? Initially, Lehman said Barclays should have to pay the difference between the sale price and the gain. After an investigation authorised by the court in June, the number has climed to $8.2 billion.
Why would Lehman executives give away the store like that? Barclays implies that it was because many of the Lehman executives working on the deal soon expected to be hired by Barclays. Many had already been offered jobs on the condition that the deal was closed.
Barclays says that Lehman is simply trying to retrade on the deal now that the economy has improved.
“This is an opportunistic claim,” Barclays said in a statement on Tuesday (via Reuters). “Now that the economy has begun to stabilise the Lehman Estate is trying to re-trade the deal on the basis of a meritless argument.”