The first thing that strikes me in the scathing report of the Berkshire Hathaway audit committee on David Sokol, the senior executive who resigned last month, is that the thin defence of his conduct offered by Warren Buffett at the time has evaporated.
The second is that it makes Warren Buffett’s initial press release on Mr Sokol look distinctly economical with the truth. It will make for an interesting question and answer session at Berkshire’s annual shareholders’ meeting this weekend.
Here is my column at the time on the subject of Mr Sokol’s trading in Lubrizol shares before the company was acquired by Berkshire:
Mr Buffett provided a pre-emptive judgment on Mr Sokol’s behaviour last year in a memo to Berkshire’s managers and directors, including Mr Sokol. “If you see anything whose propriety or legality causes you to hesitate, give me a call,” he wrote. “If it’s questionable whether some action is close to the line, just assume it is outside and forget it.”
That is clearer than the mealy-mouthed half-defence of Mr Sokol offered by Mr Buffett in the statement announcing his departure. “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.” Not unlawful? When Mr Buffett fails to mention ethics, something is up.