FIRST, help your investment bank, the world's fourth biggest, go bust.

Then be paid big bucks to keep your job.

It sure gives an edgier meaning to 'laughing all the way to the bank'.

No wonder critics have hit out at the US$2.5billion ($3.5b) bonus that the Lehman Brothers' New York office staff will get to share.

The 158-year-old investment bank, weighed down by US$613b of debt, filed for Chapter 11 bankruptcy last week.

The bonus has been pledged by Barclays Capital, the British-based bank that last week acquired Lehman's American operation and took on 10,000 employees.

The US$2.5b pot was part of the acquisition deal.

Lehman's London staff described the offer as 'scandalous', The Times of London reported.

The 'special' treatment of the New York staff has also caused resentment among the 5,000-strong staff in Europe and the Middle East, who are not even guaranteed their pay this month.

The biggest bonuses are likely to be for MrMichael Gelband, the bank's global head of capital markets, and Mr Eric Felder and Mr Hyung Soon Lee, global co-heads of fixed income.

One London-based Lehman employee told TheTimes: 'It's an absolute scandal. I will never work for an American firm again.'

Head office silent

Added the employee: 'It looks like they are prepared to cut you off at the knees. Nobody from America has been in touch since we went into administration on Monday.'

Said another: 'Every other financial institution has been saved, including Lehman Brothers in the US, but it's another story for the employees in Europe.'

Mr Vince Cable, Liberal Democrat shadow chancellor, said: 'This is outrageous and deeply cynical.

'Part of the problem with Lehman and the other weak investment banks was that they were driven by the bonus culture, which rewarded big deals rather than good deals.

'It was what destabilised the institutions in the first place. They are being rewarded for having adopted business behaviour that has wrecked their bank.'

The US$2.5b had been accrued as part of the contribution to Lehman's group profits for the first nine months of the year.

Barclays said there is no obligation to pay it out, but analysts say the competitive pressure to keep key staff means it will have to.

Mr Bob Diamond, president of Barclays Capital, said: 'You can expect us to manage this with the same discipline and performance terms that we have at BarCap.'

According to the bankruptcy document filed by Lehman, Barclays has identified eight individuals out of the New York staff of 10,000 who are vital to make the deal succeed and a further 200 who are identified as 'key'.

It is thought that these eight directors will be locked into two-year contracts worth between US$10m and US$25m a year.

Meanwhile, Barclays has asked all 10,000 employees to attend work on Monday at the bank's Manhattan headquarters, the report said.

Over the next three months it will decide how many to keep and will use some of the bonus to meet remuneration packages. It is thought several thousand could be made redundant.

Meanwhile, Price Waterhouse Coopers (PWC), the administrator to Lehman's European operation, has demanded that the firm repay ?4.4b($11.4b) that was transferred from the UK to Lehman's USholding company just hours before the firm collapsed.

No money to pay staff

The move left London with no money to pay staff.

The report also said that PWC will want to look closely at how $2.5b had been ring-fenced as part of the deal with Barclays.

It will want to know who negotiated the sale and the precise details on who benefited.

The administrator is looking closely at how the ?4.4b was transferred - an unusally high transfer that raised eyebrows in the London office.

On Saturday, Britain's Prime Minister Gordon Brown stepped in to support PWC's claim demanding the American division return the ?4.4b.

PWC has a team of more than 200 accountants and 100 lawyers working round the clock at Lehman's headquarters at London's Canary Wharf.

Mr Tony Lomas, who is heading the team and who also handled the administration of Enron in Britain, said that Lehman was 'as close to a mirror image as you could get' to that case.

This article was first published in The New Paper on September 22, 2008.