The billionaire Warren E Buffett offered on Saturday his sharpest criticism yet of a former top lieutenant at his investment company, Berkshire Hathaway, saying that David L Sokol had violated company trading policy and calling Sokol?s actions ?inexplicable and inexcusable.?
Addressing a gathering of thousands of investors at Berkshire?s annual shareholders meeting here, Buffett spoke at length publicly for the first time about the controversy involving Sokol, who resigned from Berkshire a month ago after it was revealed that he had bought shares in the chemical maker Lubrizol before pitching that company to. Buffett as a potential takeover target.
?I don?t think there?s any question about the inexcusable part,? Buffett said. ?He violated the code of ethics. He violated our insider trading rules. He violated the principles I lay out every two years.?
Since disclosing Sokol?s trades one month ago, Berkshire has conducted what it says are more thorough inquiries into the matter and found more of what Buffett called ?pretty damning evidence? that it has forwarded to the Securities and Exchange Commission.
Buffett , whose list of potential successors shrank in March with the resignation of David Sokol , said the top choice has the integrity the job requires.
?The leading candidate right now, I would lay a lot of money on him being straight as an arrow,? Buffett, 80, told shareholders today at Berkshire?s annual meeting.
Buffett is sizing up executives at Berkshire?s more than 70 subsidiaries in search of a successor. Sokol, 54, was considered by Buffett biographer Andrew Kilpatrick as the top candidate before stepping down amid disclosures about his stock dealings. Omaha, Nebraska-based Berkshire said in February that it had four candidates, without identifying them.
Still, Buffett, 80, conceded that he had erred in not asking more questions of Sokol about his investment in Lubrizol, especially as Sokol was presenting the company as a possible acquisition. ?I obviously made a big mistake by not saying ?well, when did you buy it?? ? Buffett said.
Buffett said he first grew concerned about the Lubrizol deal after a conversation with a longtime Berkshire broker, John Freund of Citigroup, who mentioned the investment bank?s role in highlighting the chemical company to Sokol as a potential acquisition for Berkshire. That began a series of inquiries by Berkshire and its outside law firm.
The cloud hanging over Berkshire in the aftermath of Sokol?s departure lent a more serious tone to the annual meeting, which in most years is a lighthearted celebration of the conglomerate?s astoundingly consistent success.
More traditional elements of Berkshire shareholder meetings were present earlier in the day. . Buffett took a tour of exhibitions in the Qwest Center, including those set up by Burlington Northern Santa Fe, See?s Candy and Dairy Queen, all owned by Berkshire. Over 100 shareholders and photographers pressed close to the Berkshire chief, with passersby straining to get even a blurry photo of themselves next to the back of Buffett?s head.