Buffett's successor quits amid $3m share scandal

Warren Buffett's Berkshire Hathaway was last night plunged into a succession crisis, after the billionaire's assumed successor quit in a share-trading scandal.

David Sokol, one of Mr Buffett's closest lieutenants, was revealed to have made a $3m paper profit on shares in the chemicals maker Lubrizol, after persuading Mr Buffett that Berkshire should make a takeover bid.

Mr Sokol's purchases of shares in Lubrizol began on 14 December last year, the day after he picked the company from a list of potential bid targets drawn up by Berkshire's bankers at Citigroup. Berkshire announced the $9bn takeover of Lubrizol, one of the largest acquisitions in Mr Buffett's career, earlier this month.

"Dave's purchases were made before he had discussed Lubrizol with me and with no knowledge of how I might react to his idea," Mr Buffett said last night, in a letter to Berkshire shareholders announcing Mr Sokol's resignation. "In addition, of course, he did not know what Lubrizol's reaction would be if I developed an interest.

"Furthermore, he knew he would have no voice in Berkshire's decision once he suggested the idea; it would be up to me and [vice-chairman] Charlie Munger, subject to ratification by the Berkshire board, of which Dave is not a member."

Mr Sokol first presented Lubrizol as a potential takeover target to Mr Buffett in mid-January, after he had amassed 96,060 shares in the company at up to $104 per share. It took him several weeks to persuade Mr Buffett of the merits of the deal, but eventually a formal bid was tabled at $135 per Lubrizol share.

In his statement to shareholders, Mr Buffett sought to portray Mr Sokol's resignation as unrelated to the share-trading revelations. He said the "unusual" press release contained "two sets of facts, both of them about David Sokol". And he said he did not ask his lieutenant to quit.

"Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign."

In a section of his resignation letter released last night, Mr Sokol wrote to his boss: "As I have mentioned to you in the past, it is my goal to utilise the time remaining in my career to invest my family's resources in such a way as to create enduring equity value and hopefully an enterprise which will provide opportunity for my descendants and funding for my philanthropic interests."

Mr Buffett revealed that Mr Sokol had twice before mooted leaving Berkshire but had been talked out of it.

The billionaire investor often heaps praise on his senior managers, not least for their devotion to Berkshire when other giant companies pay their executives much higher salaries and bonuses.

Mr Sokol came to prominence at Berkshire as chief executive of MidAmerican, a power company, and he has more recently run NetJets, the private jet hire division which ran into trouble. His experience across Berkshire's sprawling collection of businesses, and his closeness to Mr Buffett, led investors and analysts of the company to believe that he would eventually step into his boss's shoes.

The 80-year-old Mr Buffett has never publicly revealed Berkshire's succession plan, though he has always said it is well known to the board. His responsibilities will be divided between a chief executive that would oversee its operating businesses, expected to be Mr Sokol, and a new chief investment officer who would manage the company's portfolio of shares.

Arts and Entertainment
arts + entsWith one of the best comic roles around, it's no wonder she rarely bothers with films
News
people
News
i100
News
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
PROMOTED VIDEO
Voices
A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
News
i100
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Life and Style
A small bag of the drug Ecstasy
Health
News
i100
Life and Style
Floral-print swim shorts, £26, by Topman, topman.com; sunglasses, £215, by Paul Smith, mpaulsmith.co.uk
FashionBag yourself the perfect pair
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

Financial Analyst - Forecasting - Yorkshire

£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

Business Architect - Bristol - £500 per day

£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

Regulatory Reporting-MI-Bank-Cardiff-£300/day

£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Day In a Page

Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

Hunters protect Russia's rare Amur tiger

In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
Transfers: How has your club fared in summer sales?

How has your club fared in summer sales?

Who have bagged the bargain buys and who have landed the giant turkeys
Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

'I'm a realist; I know how hard this business is'

Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

The best swim shorts for men

Bag yourself the perfect pair and make a splash this summer
Has Ukip’s Glastonbury branch really been possessed by the devil?

Has Ukip’s Glastonbury branch really been possessed by the devil?

Meet the couple blamed for bringing Lucifer into local politics
Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup