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Wednesday, 5 November 2008

A salutory Excel lesson from Barclays and Lehman Brothers

I have reproduced the following article from AccountingWeb because I think it is a very amusing, yet sobering demonstration of the importance of using Excel properly, and ensuring that Excel spreadsheets are set up in a robust way:

Hidden spreadsheet rows hit Barclays with toxic Lehman

On Tuesday 5 November, lawyers for Barclays Capital appeared before the US
Bankruptcy Court in New York to try and extricate the company from taking on
Lehman Brothers liabilities accidentially included in a PDF copy made of an
asset spreadsheet. John Stokdyk reports.

Following Lehman's collapse in September, Barclays Capital agreed to
pay $1.35bn for the failed bank's assets once they had been stipped clean of
some of the more toxic elements.

Unfortunately, a docket submitted by Barclays' representatives Cleary
Gottlieb Steen & Hamilton LLP to the bankruptcy court in advance of the 22
September sale date included 179 contracts that should have omitted.

In an affadavit uncovered by the Above the website, the junior associate who compiled
the list explained what happened.

On the evening of 18 September a colleague asked the clerk to help
reformat an Excel asset spreadsheet and convert it into a PDF.

"Some of the rows of the original Excel spreadsheet were spaced too
close together or too far apart, making it difficult to read when printed or
converted to PDF format. I therefore globally re-sized all the rows in the
document to make it easier to read when printed or converted to PDF format." The
clerk also removed several columns that were not needed in the final document.

The coverted document was subsequently handed into the court, but the
clerk was not aware that the original spreadsheet included hidden rows, nor that
there were 179 contracts designated with “N” in a column to indicate that they
should not be included in the sale.

"I also was not aware that these hidden rows were exposed when I
globally re-sized the rows in the spreadsheet or that, once exposed, they would
appear without the original designations," the unfortunate clerk testified.

The law firm says that a junior associate had reformatted an Excel
spreadsheet into a PDF document to post on the court's website.

Clearly Gottlieb filed a motion to asking for relief from the final
sale order due to "mistake or excusable neglect" to extricate its client from the
potentially disastrous commitments.

Above the Law noted that the work took place just after 11:30pm. "Who
knows how much sleep anybody at Cleary got between Lehman crashing on the 15th
and the 18th when the mistake happened? And, as we all know, they don't teach
"Excel" in law school and they really, really should," it commented.

If you want to make sure you don't make the same kind of mistakes yourself,
take a look at the
workshop I am running in January.

1 comment:

  1. Wow this is a great resource.. I’m enjoying it.. good article