PWC sues Lehman Bros over European funds removal

Losses & Lawsuits

LONDON - The administrators for Lehman Brothers' London-based European subsidiary have filed a court order calling for $8 billion in funds to be returned to the UK, after it was removed to the bank's New York central treasury.

PricewaterhouseCoopers (PwC) has been administrating the bank since it filed for bankruptcy in the US on September 15. PwC says the money is needed to pay creditors, salaries, bills and expenses. A PwC spokesman says the return of the bank's hedge fund prime brokerage assets would take several months to conclude. This follows the Japanese Financial Services Authority's move on September 15 to stop Lehman removing remaining assets from the bank's Japanese unit.

Meanwhile, Peter Fleischer, Detlef Leinberger and senior vice-president for risk control Rainer Hartje at German bank KfW have been suspended, after a failed swap deal with Lehman on the morning of its bankruptcy cost the German bank EUR350 million. KfW reportedly transferred EUR350 million to Lehman just hours before the bank filed for US bankruptcy and more than three hours after Lehman warned of its looming insolvency. Lehman's agreed repayment of $500 million in US dollars was never paid. All three have been suspended prior to clarification of the incident.