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UK Online Article from THE FIRST POST...

Barclays gets slapped with $5bn Lehman suit

UK bank was seen as a saviour at the time: now it’s accused of profiteering

By Edward Helmore

FIRST POSTED NOVEMBER 17, 2009

Barclays is being sued by the trustees of Lehman Brothers for the return of a $5bn 'windfall' they claim was improperly pocketed by the British bank during its emergency purchase of Lehman last year.

Lawyers for the failed investment bank are seeking a trial to recover the money, plus damages. "The sale transaction was secretly structured from the outset to give Barclays an immediate and enormous windfall profit," lawyers for Lehman claim. Barclays also stands accused of failing to pay about $500m in bonuses and of meeting only $238m of $1.5bn in other obligations.

Barclays is now facing at least three lawsuits over its fire-sale purchase of Lehman with claims against the bank totalling $10bn.

The acquisition of Lehman - a sale that was pushed through rapidly for fear there wouldn't be anything left to sell - was widely regarded as a rare financial-crisis win for the London bank. The bank made a net gain of $4.2bn on the value of the assets it acquired through the sale.

But the central claim against Barclays is that it received Lehman securities valued at about $50bn for just $45bn in cash.
Included are accusations that Lehman executives who negotiated that deal knew they would receive offers to work at Barclays. It is claimed that one executive, who has now left the firm, was offered a compensation deal worth $37m.

So, Barclays, treated as a saviour at the time, is now being forced to answer accusations of profiteering. (Last week, Barclays CEO John Varley said that "profit is not satanic".)

But if the Barclays lawsuits illuminate hitherto obscure parts of the Lehman's collapse, other parts of Barclays business remain obscure: the firm just paid the New York transit authority $4m to splash its name on the Atlantic Avenue­Pacific Street hub in Brooklyn, an unremarkable terminus in the underground system.

Back in the old Lehman headquarters in Times Square (above), the bank is tearing out the old "Lehman green" tinted carpets and replacing it with Barclays blue. The art on the walls has also changed, reports New York magazine. "They replaced the hideous Lehman art with hideous Barclays art," noted one employee.

http://www.thefirstpost.co.uk/56209,news-comment,business,barclays-gets-slapped-with-5bn-lehman-suit