Memories of Lehmans Lost

The sudden demise of one of America's classic investment banking houses this week has provoked a rush of memories in me of the mid-1980s, when I was involved in a triangular joint venture with Lehman Brothers in London. In fact, I should call them "Kuhn Loeb Lehman Brothers" as they were meant to be known in Europe, or "Lehman Brothers Kuhn Loeb" as they called themselves in the States. KL was an illustrious name from pre-war days through the 1970s, and better known in international business than LB, who had then already a pretty big but mostly domestic business in New York. (Lehmans have been through a half-dozen changes of name and ownership in the last decades, from Kuhn Loeb to Shearson, to Amex, and I have no doubt they will re-emerge soon with some remnant of the name intact: it had such a nice ring to it.) Anyhow it was all "Lehmans" to us "Brits", since I worked at the UK partner in this JV, S.G. Warburg & Co. The third leg of the triangle - although they would naturally have resented this description - was Lazard Freres in Paris (nb only Paris). Together, the firms had, more or less by accident, developed a joint venture advising third-world governments on the management and resolution of their external debt burdens with official and private creditors. It had all started in Indonesia in the late '70s, when the government asked all three firms to co-operate in advising on the financial restructuring of the state oil company, Pertamina. Later, this branched-out into privatisation advice, investment promotion, and even generalised policy assistance with preparing support for (or responses to) IMF programmes and the like. We were called the "Troika" in the press, and the business had a pleasingly romantic, cloak-and-dagger aspect (which was wholly undeserved, mostly) because of the flamboyant senior Directors in the various firms who landed the clients and kept the dealflow alive. Joining the Warburgs of the early '80s in London straight from grad school at the LSE (in Anthropology, mind you), this was my entry and introduction to banking.

The Lehmans end of the Troika was headed by a big former government official aptly called Dick Moose, and the teams who flew in to join us from New York were populated by interesting characters like Teddy Roosevelt IV (grandson of the US President of the same name), and a range of expensively educated young men (yes, all men) - my team peers - whom we found difficult to fathom. For while they evidently had talent and energy, somehow they were never there when we needed them. The internal pressures were such that ambitious professionals, even at quite junior levels, were pushed to be involved in as many deals as possible. Having fingers in pies meant having claims on bonus calculations. The effect of this was to fragment their energies and encourage cutting corners. We and the dames et messieurs from Lazard had simpler lives (and far, far smaller bonuses), expected as we were to focus on our clients and get on with it, which led to frictions from time to time. It was obvious to us then already that the bonus culture and the cut-throat internal politics led to short cuts and a fast-and-loose view in respect of conflicts of interest. Where we starchy Warburg types were barred from any corporate work in the countries we were active in as government financial advisers, the Lehman team was actually pushed to leverage their position and find transactional pay-back to the firm's privileged position with the authorities.

But the boys from lower Manhattan were fun to be with. I worked mostly on African and Caribbean mandates in those days, and in Libreville or Kinshasa, Abidjan or Georgetown-- mostly places today to be avoided -- we relished the Lehmans turn to host the team dinner. Amex cards would flash, and only the best food would be found, even if it meant a long drive out into the bush, or up to the hills, crazy oases of expat opulence, with private generators. I remember one such place, down the Congo river and up in the hills above Kinshasa, where Lebanese restaurateurs were sent scurrying to dig out special reserves of good wines at any price, in the deepest jungle, without a blush. Never mind that you drove into town from the airport in a cab with a bucket of petrol on your lap, and a hose snaking out of sight towards the engine, afro-rave blaring at high volume whilst you held the hose in place.

They had panache, the Lehmans crowd, and dosh, and good suits and good humour. We liked these guys, but were nearly always cleaning-up after them professionally and beating them up for lousy work. It all seemed a bit like a confidence trick and we always wondered how it worked. It seems, in the end, that it didn't.