German police search federal bank office

23rd October 2008, Comments 0 comments

The KfW bank remitted 319 million euros to Lehman Brothers of New York on Sept. 15, the day that the US investment bank failed.

Frankfurt -- German police led by prosecutors searched the offices of a federally owned bank Wednesday in connection with a banking blunder last month as the financial crisis developed.

The KfW bank remitted 319 million euros to Lehman Brothers of New York on Sept. 15, the day that the US investment bank failed.

The main office of KfW in Frankfurt was searched.

City prosecutors told DPA that they were following up an initial suspicion of possible misappropriation of corporate funds by executive board members. Federal Crime Office police were working on the case.

A prosecutions spokeswoman, Doris Moeller-Scheu, said on N-TV television the suspects were two executive board members responsible for risk management.

Detlef Leinberger and Peter Fleischer, who belonged to the seven-member board, have been suspended by the bank, which administers German federal government soft loans to industry, homebuilders and students and also invests government funds.

KfW said at the time the sum was transferred to Lehman as part of a currency swap. The US bank did not fulfill its side of the deal. It was one of a large number of KfW swaps. All the others were unwound in time before Lehman failed.

A KfW spokesman said the bank was fully cooperating with the authorities and making all data available.

DPA/Expatica

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