US investment bank Lehman Brothers said it had filed a lawsuit on Monday to claw back $352 million from Japanese trading house Marubeni in the wake of a finance scam.
Lehman blames Marubeni staff for the swindle, which a source with direct knowledge of the matter said involved forged documents and an imposter at the trading company's offices.
"The fraud by these employees is believed to have been perpetrated against several financial institutions and other parties, including Lehman Brothers," said Matthew Russell, head of corporate communications Asia-Pacific at Lehman Brothers.
The legal threat saw shares in Marubeni, Japan's fifth-biggest trading house, plunge 6.6 percent, although it argued its staff may also have been duped in the case.
If Lehman is right, the scam artists have perpetrated one of the more sophisticated corporate con jobs since Enron set up a fake trading floor to impress analysts.
The US investment bank played down the risk of any losses, saying it took appropriate reserves in the first quarter and had insurance coverage to offset any damage from the scam.
The dispute arises as Lehman has been beset by market rumors that the fourth-largest independent Wall Street house could see a run on the bank similar to the one that dragged down rival Bear Stearns . Lehman has said it has more than enough capital to do business in the current environment.
The loans in question were made last year to finance a revamp of hospitals and lease medical equipment via Asclepius, a now bankrupt unit of drug firm LTT Bio-Pharma, and arranged through Marubeni staff, said the source, who declined to be identified due to the legal action taking place.
When repayment fell due on Feb. 29, the Lehman was told by Marubeni that its contract was void because it had been signed with a forged seal, the source said. Seals are used for business and legal transactions in Japan.
Lehman Brothers also believed that one of the people it had discussed the loans with had been an imposter, the source said.
Lehman said its claim was filed at the Tokyo District Court on Monday morning.
Marubeni, which fired two contract employees involved in the case on March 10, said in a statement on Saturday that the staff had been manipulated by a former president of Asclepius and had been forced to use company offices without authorization.
The two contract workers told an internal Marubeni investigation that they had not been involved in forging documents or in Lehman's loan, a Marubeni spokesman said.
The Japanese company, which traces its roots back to 1858, also said it had not approved the leases and that police were investigating the case.
LTT Bio-Pharma said the former president of Asclepius may have been involved in the scam and was fired on March 7 and its own president resigned the same day. But it added in a statement that the company itself had not been aware of any fraud.
A woman at the Asclepius office who identified herself as an assistant to the bankruptcy administrator said no one from the firm was available to comment and the former president could not be reached.
Marubeni's shares fell as low as 712 yen on Monday, before recovering to close at 726 yen, down 6.6 percent.
"Concerns that the company may face a huge loss are weighing on the stock," said Yasuhiro Narita, an analyst at Nomura Securities.
"The issue of company governance will also arise should its former employees be found to be directly involved in fraud."
With a strong base in natural resources and power generation businesses, Marubeni has been enjoying rising profits that sent its shares up 30 percent in 2007.