Martin Vander Weyer’s Any Other Business
No sooner do I confess (6 March) to having dabbled in the dark art of off-balance-sheet finance, than along comes an official report into the 2008 collapse of Lehman Brothers, the Wall Street firm led by the monstrous Dick Fuld, that reveals the mother of all financial disappearing tricks. This was a series of transactions codenamed ‘Repo 105’, under the advice of the eminent City law firm Linklaters and without demur from Lehman’s auditors Ernst & Young, designed to exploit a disparity between US and UK law that allowed $50 billion of Lehman liabilities to pretend they weren’t there.
The unfolding Lehman saga, as told by the US court-appointed examiner Anton Valukas, confirms my view that some of the firms exposed by the banking crisis were not just ill-managed — they were not real businesses at all. By ‘real businesses’, I mean enterprises that are disciplined, law-abiding and fundamentally concerned with the task of providing, for a competitive price, a product or service that does what it says on the tin; I mean businesses that are tough when they need to be but nurture their customer relationships, treat staff decently, and thrive on concepts such as ‘continuous improvement’ and ‘shareholder value’.
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