Repo 105 detailed in an earlier post may be regarded as the acme of financial skulduggery at Lehman Brothers. But it is not the only malpractice adopted by the bankrupt firm. Though LB acted as a cohesive group in misleading the financial world, there was one conscientious employee who was predictably sacked after he wrote a confidential letter to top management expressing his discomfort about the firm's presentation of financial statements.
The honest deviant is one Mr.Matthew Lee who wrote to the top management on May 16 2008. In this letter which is likely to be profusely quoted in different platforms in the near future, he describes his official position as "Senior Vice President in charge of the firm's consolidated and unconsolidated Balance Sheets of over one thousand legal entities worldwide". What is interesting is that of all these 1.000 + legal entities (one may note with disdain that the entities were legal, only their accounting processes perhaps were not), he singles out the Mumbai office for an unflattering comment.
Para 5 in the brief letter says, "Based upon my experience and the years I have worked for the Firm, I do not believe there is sufficient knowledgable management in place in the Mumbai, India Finance functions and department. There is a very real possibility of a potential misstatement of material facts being efficiently distributed by that office". (Efficient distribution of a misstatement , how prophetically sarcastic ! )
Speaking of the entire firm, Lee observes "certain senior level internal audit personnel do not have the professional expertise to properly exercise the audit functions they are entrusted to manage".
Is there any reason to trust that other equally "reputable" firms are managed better ?
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