Lehman Bros. sues Marubeni over investment scam
TOKYO (AFP) — Lehman Brothers on Monday sued Japan's Marubeni Corp. for about 350 million dollars over a bogus investment scheme allegedly involving two employees of the trading giant.
Lehman Brothers filed a lawsuit with the Tokyo District Court seeking compensation of 35.2 billion yen (352 million dollars) from Marubeni, said a spokeswoman for the US bank who declined to be named.
It also filed a letter with the Tokyo Metropolitan Police Department alleging that it had been a victim of fraud, she said.
"The firm is confident in its legal case and fully expects its funds to be repaid," Lehman Brothers spokesman Matthew Russell said in a statement, adding that there was no impact on the bank's earnings.
Marubeni, a trading giant whose interests span chemicals, energy, textiles and aerospace, denied any responsibility.
"The act was conducted solely by individuals," the group said in a statement. "As a company, our firm has never been involved."
Marubeni Corp shares tumbled 51 yen or 6.56 percent to close at 726 on the Tokyo Stock Exchange.
"The amount of compensation (being sought by Lehman Brothers) is not big enough to seriously damage Marubeni's finances, but investors tend to be concerned about corporate image following such news," said Masatoshi Sato, strategist at Mizuho Investors Securities.
Lehman Brothers said it was defrauded out of 350 million dollars through a hoax in which Marubeni employees used forged documents and an impostor to solicit funds that were supposed to be used to refurbish hospitals.
Two Marubeni employees -- who were fired in early March -- and venture Asclepius Ltd. allegedly used faked documents which promised Marubeni would assume debt repayments in the event of insolvency of the firm, reports said.
Asclepius, a wholly owned unit of medical consulting firm LTT Bio-Pharma Co., has since filed for bankruptcy.
"Before filing the bankruptcy application, we dismissed the president of Asclepius as we reached a conclusion that he was almost certain to have been involved in the dubious scheme," said an official of LTT Bio-Pharma.
Under the scheme, Asclepius lent funds to hospitals through a third party for the purchase of medical equipment from Asclepius or Marubeni. Investors in the funds were supposed to receive repayment with interest later.
The two former employees and Asclepius told investors they could expect a 10 percent return even if the projects failed, and more if they went well, Kyodo News said, quoting sources close to the case.
They used a conference room at Marubeni for meetings with investors and presented a fake in-house Marubeni document to make investors believe that Marubeni executives had endorsed the projects, Kyodo said.
The incident came to light on March 6 when an investor in the scheme contacted Marubeni after failing to receive any payments.
Adding to the pressure on Marubeni's share price, the group said its London-based unit Marubeni International Finance had suffered losses of 17.6 billion yen amid the fallout from the global credit crunch.
