David Prosser: Buffett dropped a clanger when he backed Sokol so publicly


Outlook A month ago tomorrow, Warren Buffett, chief executive of Berkshire Hathaway and the world's most famous investor, issued a tersely worded statement. Mr Buffett announced the resignation of one of his most trusted lieutenants, David Sokol, as well as disclosing that Mr Sokol had owned shares in Lubrizol, a company he had recommended to his boss as a takeover candidate for Berkshire Hathaway – a tip that was acted upon. The resignation and the shareholding were unconnected, Mr Buffett said, insisting Mr Sokol had done nothing unlawful and adding that he would not utter another word on the topic.

As Berkshire Hathaway investors gather for the company's annual meeting this weekend, Mr Buffett is going to have a tough time sticking to that. Berkshire Hathaway's official line changed on Wednesday night, disclosing that following an investigation into the Lubrizol purchase, it was considering taking legal action against Mr Sokol. The company itself is already facing a lawsuit from a shareholder over the matter.

Now, Mr Sokol continues to insist he has done absolutely nothing wrong. Nor has he been charged with any offence by the authorities. Still, Berkshire Hathaway's swift about-turn leaves Mr Buffett looking rather silly. Having publicly insisted that his former acolyte had nothing to be embarrassed about, Mr Buffett may soon be instructing lawyers to issue proceedings against him.

The "Oracle of Omaha", as he is sometimes known, has cultivated his reputation for plain-speaking and folksy straightforwardness. The Sokol affair is beginning to look as if it may tarnish the image.

Though Mr Buffett said last month that he would entertain no further questions about the matter, it is now clear that Berkshire Hathaway was intent on making some additional inquiries of its own. Like finding out exactly how much money Mr Sokol made from the Lubrizol deals, for example, and when he decided it might be a good acquisition opportunity for Mr Buffett and Berkshire Hathaway.

The company was quite right to launch an investigation. The high standards of probity Mr Buffett insists upon publicly and privately required no less. The question is why Mr Buffett in his public statement on the matter was so unwilling to even consider the possibility of misdeeds.

Mr Buffett, though he is now 80, shows no sign of wishing to relinquish the reins at Berkshire Hathaway. That is his privilege, for this is a company he has built almost single-handedly, enriching his investors beyond their wildest dreams. Still, the Buffett fans gathering to pay homage to the great man tomorrow are entitled to hear what the company is planning on the question of succession. And this sorry episode reveals even Warren Buffett is not infallible.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Admin Assistant

£12000 - £15000 per annum: Recruitment Genius: An expanding Insurance Brokerag...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders