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Sokol Incident Is Sad, With Buffett Accepting Some Responsibility


Guest ValueCarl
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Guest ValueCarl

Buffett acknowledges that he made a mistake by not asking Sokol more about his Lubrizol stock when they first discussed the company in January. But Buffett says he didn't have reason to think Sokol had just bought the stock the week before.

 

http://finance.yahoo.com/news/Buffett-says-former-apf-2512375915.html?x=0&sec=topStories&pos=main&asset=&ccode=

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Guest ValueCarl

More color from The Oracle of Omaha.

 

http://finance.yahoo.com/news/Buffett-says-mistakes-were-apf-2512375915.html?x=0&sec=topStories&pos=main&asset=&ccode=

 

One of the early questions asking why Buffett wasn't tougher with Sokol drew mild applause from the audience because Buffett has always promised to be ruthless with anyone who hurts Berkshire's reputation.

 

Buffett said the reason he wasn't harder on Sokol when he announced the former MidAmerican Energy chairman's resignation in March was because he didn't have all the information at that point.

 

Sokol, who resigned earlier in April, denies any wrongdoing. Before his departure, Sokol had served as chairman of Berkshire's MidAmerican Energy, NetJets and Johns Manville units.

 

Sokol's roughly $10 million Lubrizol investment turned into about $13 million after Berkshire announced its $135 per share offer for the company. The $9 billion deal also includes Berkshire assuming about $700 million in Lubrizol debt.

 

Buffett said he learned about the role investment bankers played in the Lubrizol deal only after it was announced, and when questioned by Berkshire's chief financial officer, Sokol initially failed to say that he had met with the investment bankers.

Buffett said Sokol's resignation letter showed up unexpectedly on March 28 just as he was preparing to call a board meeting to review the matter.

 

Berkshire's audit committee said Wednesday that the board may consider legal action against Sokol to recover his trading profits and compensate Berkshire for any damage it sustained.

 

 

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