By David Robertson and Alexandra Frean, Timesonline
Monday, 15 March 2010 20:47
Linklaters, one of Britain’s leading law firms, approved controversial accounting practices that allowed Lehman Brothers to shift billions of dollars of debt off its balance sheet and mask the perilous state of the bank’s finances before its catastrophic collapse in 2008.
A 2,200-page report into the collapse of the 158-year old institution has uncovered evidence that Lehman used “balance sheet manipulation” in the form of an accounting practice known as “Repo 105”, without telling investors or regulators, that made the business appear healthier.
Lehman initially had sought legal clearance from an American law firm to permit Repo 105 transactions but was denied. It then sought advice from Linklaters in London, which said that the deals were possible under English law.
The Repo 105 practice had been in use by Lehmans since 2001 but in the bank’s final two years it was regularly used to alter public perceptions of the bank’s balance sheet.
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