Berlin - The German government reacted with fury Wednesday to
an admission by federal bank KfW that it passed 300 million euros (420
million dollars) to Lehman Brothers only hours before the US bank
failed.
The sum was part of a swap arrangement, said a KfW spokesman in
Frankfurt. He said there had been a 'technical' blunder.
Critics said a prudent bank would have held on to the money,
knowing from Sunday news reports that Lehman was broke. Swaps are
often programmed in advance into computers so that they happen without
human intervention.
Finance Ministry spokesman Torsten Albig said the remittance was
'infuriating' and those to blame must be found, but an aide to
Economics Minister Michael Glos said it was too early to say if anyone
would be punished.
KfW said its internal auditors were investigating, but it could not
yet say if there had been a net loss.
Opposition politicians in parliament were scathing. Guido
Westerwelle, leader of the Free Democrats, said, 'So they tossed
another 300 million to the bankrupts.'
Set up in 1948 to administer Marshall Plan funds, KfW is the German
federal government's in-house bank and lends to home-owners and
industry.
It is already reeling after a subsidiary, IKB, lost billions of
euros last year and had to be bailed out.
Some accounts said KfW staff tried in panic to unwind the Lehman
transaction, but could not.
Financial sources said KfW could only hope to recover about half
the sum, with Lehman expected to pay 40 to 50 cents in the dollar to
its creditors as it is wound up.
Other sources told Deutsche Presse-Agentur dpa that the bank board
would ask KfW chief executive Ulrich Schroeder at a meeting Thursday
to explain the blunder.
The newspaper Handelsblatt said the Lehman Brothers crash could
also prompt the biggest payout in the history of the German banking
industry's deposit guarantee fund.
Lehman's German subsidiary had been a member of the mutual-aid
arrangement, in which banks jointly guarantee the safety of customers'
deposits.
USA
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