Lehman Brothers 'sacked whistleblower for exposing dubious accounting'

18 March 2010

Lehman Brothers sacked a worker who pointed out the bank's dubious accounting practices to auditor Ernst&Young, it has been alleged.

Matthew Lee, a senior vice-president in Lehman Brothers' finance division, sent an email to the auditor on May 16th 2008 outlining six separate allegations of unethical accounting.

This included the Repo 105 transactions, which have recently been described as an "accounting gimmick" that allowed the bank to hide $50 billion worth of debts from the company's balance sheets.

According to Mr Lee's lawyer, Erwin Shustak, it was this whistleblowing that was behind Lehman Brothers' decision to make his client redundant in June 2008.

"It was just easier to shut him up and let him go," Mr Shustak told the Wall Street Journal.

Last week, Anton Valukas, the court-appointed examiner who conducted a year-long investigation into the collapse of Lehman Brothers, said that senior executives, including the bank's chief executive officer Dick Fuld, had been involved in using Repo 105 to put out misleading financial statements.

By Gary Cooper

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