Buffett deals out stinging attack on former acolyte
Thursday 28 April 2011
Warren Buffett, the billionaire investment guru, sent a thunderous message to his chief lieutenants last night: deceive me and bring my company into disrepute and I will fire you, humiliate you and perhaps even pursue you in the courts.
Mr Buffett's giant conglomerate, Berkshire Hathaway, issued a damning public attack on the man who had been lined up as his successor, David Sokol, who quit the company last month amid revelations he had bought shares in a firm that Berkshire went on to acquire.
With the issue threatening to overshadow this weekend's annual meeting of Berkshire shareholders, Mr Buffett has published the internal audit committee report into Mr Sokol's actions.
The executive, who has run several of Berkshire's important subsidiaries, bought shares in the chemicals company Lubrizol the day after picking it from a list of potential takeover targets and asking to start talks with its management.
Not only did the share purchases violate Berkshire's ethics code, which is punishable by sacking, but Mr Sokol deceived Mr Buffett and Berkshire's chief financial officer when telling them about his holdings, the committee said.
"His remark to Mr Buffett in January, revealing only that he owned some Lubrizol stock, did not tell Mr Buffett what he needed to know. It implied that Mr Sokol owned the stock before he began considering Lubrizol as an acquisition candidate, when the truth was the reverse."
The committee said it was considering legal action to recover the $3m profit and to make sure it doesn't have to pay Mr Sokol's expenses, should he be charged with any wrongdoing. Mr Sokol has been insisting that there was no connection between his abrupt resignation and the internal furore his share trades had created.
Mr Buffett writes to his executives every two years to tell them: "If it's questionable whether some action is too close to the line, just assume it is outside and forget about it."
And last night, Berkshire's audit committee reiterated that message. "[The company's] instruction to all its representatives to play in the middle of the court is company policy," it said, "not public relations."
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