Buffett's big day marred by spat with former aide

Berkshire Hathaway's annual meeting is normally a celebration of investment success, but this year was a little different

Warren Buffett's former heir apparent, David Sokol, accused his old boss of "flip flopping" and "scapegoatism", as the issue of Mr Sokol's controversial share trading descended into a bitter war of words. The former executive's attack came hours after Mr Buffett used the annual shareholder meeting of his conglomerate, Berkshire Hathaway, to rebuke Mr Sokol for buying shares in a company that he had been pushing Berkshire to acquire.

The issue dominated the annual meeting in Mr Buffett's home town of Omaha, Nebraska, an event that is normally a celebration of the billionaire's investment smarts and folksy wisdom.

Instead, this year, Mr Buffett has been fighting his biggest crisis in two decades. Mr Sokol's share trading was revealed in a resignation statement in March, when – rather than condemning him – Mr Buffett lavished praise on his departing executive. It was only last week that Berkshire declared that Mr Sokol had broken its ethics rules, and only on Saturday that Mr Buffett himself weighed in, telling an estimated 40,000 Berkshire shareholders that the trades were "inexplicable" and "inexcusable".

The reaction from Mr Sokol was swift and swinging. In a statement, his lawyer, Barry Levine, said his client was "deeply saddened that Mr Buffett, whom he considered a friend and mentor, would disparage him as he has done today".

He went on: "It is alarming that Mr Buffett would be advised to so completely flip-flop and resort to transparent scapegoatism. After 11 years of dedicated and hugely successful service to various Berkshire Hathaway subsidiaries, Mr Sokol would have expected to be treated fairly."

Mr Sokol began buying $10m of shares in Lubrizol, a chemicals company, one day after picking it from a list of potential acquisition targets and instigating talks with a view to a takeover by Berkshire. When the acquisition did indeed happen, Mr Sokol's shares soared in value by $3m. He says he did nothing illegal or wrong.

Mr Buffett admitted that Mr Sokol had told him before the deal that he had a stake in Lubrizol, and said: "I obviously made a big mistake by not saying, 'Well, when did you buy it?'" Mr Buffett said.

The billionaire investor also addressed the issue of why he did not initially condemn the man who many had assumed would be Berkshire's next chief executive. He didn't want to "create problems for him in years to come" without also noting all the good work he did for Berkshire during his career, Mr Buffett said. Berkshire's vice-chairman, Charlie Munger, was more unforgiving about that controversial initial statement. It "wasn't the most clever press release in the history of the world," he said. And Mr Buffett joked: "What I've learned over the last year is, I'm going to have Charlie write the next press release."

After the annual meeting drew to a close, a new area of dispute appeared to open up between Mr Buffett and Mr Sokol. Mr Levine's statement claimed the two men had not spoken since the resignation and that Mr Sokol had never been given a chance to correct mistakes in Berkshire's version of events.

Interviewed by Bloomberg television, Mr Buffett said the pair had had two telephone conversations, but that he had cut them short. "He was somewhat unhappy about the degree to which the lawyers were maybe sequestering records," Mr Buffett said. "I said, 'Look, I'm going to be asked about every conversation with you so the only thing to do is not talk'."

The departure of Mr Sokol robbed Berkshire of a potential successor to the 80-year-old Mr Buffett and raised new questions about the future of the company. Mr Buffett made no revelations on the succession plan, except to predict that the candidate who replaces him would be "straight as an arrow".

The day-long annual meeting also addressed the latest Berkshire results, released late on Friday, in which the company said it was likely to make an underwriting loss in its insurance business this year for the first time in a decade. The Japanese tsunami, the New Zealand earthquake and Australian floods led to an underwriting loss of $821m in the first quarter.

Start your day with The Independent, sign up for daily news emails
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
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: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor