Operational Risk – there is nothing like an old-fashioned scam

According to Reuters in Tokyo, this could be the situation with Lehman Brothers filing a lawsuit today in the Tokyo District Court against Japan’s 5th largest trading house, Marubeni Corporation. Apparently two senior managers at Marubeni requested to arrange a loan for medical lease fund, Asclepius, and led Lehman to believe that Marubeni would provide cover for this loan. These managers arranged a meeting in Marubani’s offices at which they presented the General Manager of their life care business and provided internal documents which authorised the deal and the cover provided. The deal was completed and the money paid directly to Asclepius.

However, when Lehman presented their request for payment on February 29th, Marubani denied responsibility, saying that the two employees involved were contractors and had no authorisation, that the documents were forged, and that their premises had been used illegally. It also turned out, on Lehman checking their own security cameras, that the General Manager they met was an imposter. In the interim, Asclepius has gone bankrupt (the report says a former president of Asclepius may have been involved in the deal) and Marubani has sacked or terminated the contracts of the two managers involved. Marubani shares fell 7.5% in a day on the threat that it could be liable for the losses.

Where did it go wrong? Did Lehman manage the paperwork correctly? Should they have paid the money to Marubani and left them to transfer to Asclepius? Are Marubani responsible for what people in their employment do on their premises? Did no one ask what their employees were doing?

And where is the money? Could it have happened on Wall Street? The only sure thing is, that if it had, the script writers and Hollywood agents would have been on the case already. Maybe that could be a way to recover the money? After all, Ocean’s 11 made $444 million at the box office and many millions more being watched by budding fraudsters!