He sank the British passenger liner SS Athenia in September 1939, in violation of the Hague conventions.

Lemp later claimed that the fact she was steering a zigzag course which seemed to be well off the normal shipping routes made him believe she was either a troopship or an armed merchant cruiser; when he realized his error he took the first steps to conceal the facts by omitting to make an entry in the submarine's log, and swearing his crew to secrecy.

Adolf Hitler decided the incident should be kept secret for political reasons, and the German newspaper Völkischer Beobachter published an article which blamed the loss of the Athenia on the British, accusing Winston Churchill, then First Lord of the Admiralty, of sinking the ship to turn neutral opinion against Nazi Germany.

[1] The truth did not emerge until January 1946 at the Nuremberg trials, during the case against Grand Admiral Erich Raeder, when a statement by Admiral Dönitz was read in which he admitted that Athenia had been torpedoed by U-30 and every effort had been made to cover it up, including ordering Lemp to alter his log book.

Lemp was not among the 34 survivors rescued by the Allied vessels, and one account of his fate has him swimming back to the submarine when he realized that the scuttling charges were not going to detonate, and either being shot and killed by the boarding party or drowning in the icy water.