Three senior executives at KPMG, liquidators of the Hong Kong subsidiaries of Lehman Brothers, have been summoned for questioning in Thailand in relation to the sale of properties previously owned by the collapsed bank.
The crime suppression unit of Thailand’s police force is investigating claims that KPMG failed to follow due procedure when trying to sell millions of dollars’ worth of assets in Thailand that were formerly held by Lehman. Creditors claim that KPMG may have circumvented Thai bankruptcy laws.
The Thai police confirmed to the Financial Times that they had issued three summonses in relation to the case on Monday. People familiar with the matter said they had been sent to Paul Brough, Edward Middleton and Patrick Cowley. The investigation is at a preliminary stage and no one has been accused of any wrongdoing.
The trio were appointed in September 2008 by a Hong Kong court as the official liquidator of eight local Lehman Brothers units.
The three liquidators concerned said they have not been served the papers and could not comment.
The prospect of court action could further complicate the liquidation process if KPMG’s work is delayed and payments to creditors of the Hong Kong units are put off.
It also underlines the challenges faced by KPMG in dealing with Lehman’s real estate investments, including a number of unfinished property developments across south-east Asia.
Through a number of investment vehicles, Lehman’s Hong Kong entities had accumulated a $1bn real estate exposure in Thailand, including the tourist hotspots of Phuket and Chiang Mai.
Lehman also held about 100 real estate positions – through loans to developers, direct investments and derivative contracts – in countries including Singapore, the Philippines and Indonesia, worth more than $1bn.
It had invested in Japanese domestic property and some Chinese property companies that planned an early stock market listing – so-called “pre-IPO” opportunities.
Destination Properties, which was Lehman’s joint-venture partner from 2006 to 2008, developed five projects with Lehman Brothers Commercial Corporation Asia (LBCCA), a Lehman unit, in places including Hua Hin and Phuket.
Jacob Vigoda, president of Bangkok-based Destination Properties, filed a complaint to the Thai police on November 5. The complaint is against LBCCA, and the three executives.
Following the collapse of Lehman, Destination Properties had demanded LBCCA return the properties because the Lehman unit had failed to provide its full investment under the terms of their agreements, according to a copy of the police report.
But LBCCA allegedly ignored its demand and went on to auction the properties. Destination Properties claims that such an act is an offence on the grounds of misappropriation.
The police investigation continues. It is unclear whether the trio will need to go to Bangkok to assist the police.
