BARCLAYS president Bob Diamond was labelled “evasive” by a US judge yesterday as the legal clash between the British bank and parties representing Lehman Brothers intensified.
Testifying before a bankruptcy court in Manhattan, Diamond accepted Barclays took Lehman Brothers’ US brokerage at a good price “in the context of the turmoil in the financial markets”, but played down suggestions it raked in a $11.1bn (£7.5bn) windfall when it rescued the firm.
Lawyers acting for Lehman Brothers’ creditors, its trustee and its estate accuse Barclays of hiding a huge discount in the paperwork of the deal. They claim Barclays pocketed $5bn from Lehman Brothers’ securities book, took a further $4.2bn to cover bonuses and other liabilities, and strong-armed Lehman Brothers executives to help transfer extra assets at the last minute.
At one point, when discussing whether or not it was assumed Barclays would pick up the American brokerage at a distressed price, Diamond was told by judge James Peck: “You’re being evasive.”
Bryan Marsal, in charge of winding up the remnants of Lehman Brothers, told the court there was “a substantial built-in gain from the transaction” to the detriment of creditors.