The New York Times was out yesterday with an article on Sokol referring to a couple of additional instances of him being less than a saint.
I think what Sokol did with buying Lubrizol in the quantity he did at the time he did is quite clearly bad judgement on his part. When you are as rich as he is why push the envelope.
I have a little bit of a hard time reading the flood of negative articles about Warren that have come out as a result of this. But if I try and be objective about it the truth is that Buffett has brought this sort of criticism on himself.
Year after year Buffett has preached about ethics and how important reputation is. His compliments towards his managers are frequent and quite over the top. And his criticism of Wall Street is quite regular and harsh. There has to be a large number of people just sitting and waiting for any tarnish on the image of Buffett so that they can let him have it.
And when there is a bit of controversy Warren really isn't very open about it. I haven't ever heard any comments on Ronald Ferguson at General Re who was sentenced to jail time, or comments about Santulli at Netjets who once received a lot of praise from Buffett.
Here is the article on Sokol:
Lawsuits involving David L. Sokol after he joined Berkshire Hathaway suggest that management had some warnings about his rules-pushing nature long before his resignation last week for buying stock in a company shortly before Berkshire acquired it.
The most serious lawsuit centered on the accounting of an irrigation project by MidAmerican Energy, where Mr. Sokol was chief executive when Berkshire bought it in 1999.
In a rebuke last year, the judge ruled in that case that MidAmerican had improperly changed its accounting on the project and criticized Mr. Sokol directly. The change in accounting was “intended to eliminate the minority shareholders’ interests,” the judge wrote, awarding more than $32 million to the minority shareholders. The case had taken more than five years to work its way through the courts. During that time, Warren E. Buffett, the chief executive of Berkshire, expressed confidence in Mr. Sokol by broadening his portfolio beyond MidAmerican to include Netjets, a company that sells fractional use of private aircraft.
After Mr. Sokol took over Netjets in July 2009, some critics complained about his management style and his strategy for shrinking the company, which had been ailing even before the financial crisis did more severe damage.
Under Mr. Sokol’s direction, the aircraft company filed a suit last November seeking to learn which employees had provided information to Alice Schroeder, the author of “The Snowball,” the best-selling biography of Mr. Buffett. Ms. Schroeder declined to supply the information, and her lawyer characterized the action as a witch hunt. The suit was dropped on Monday.
The lawsuits would have been “yellow lights: if not danger signals, at least warning signs,” Ms. Schroeder said in an interview on Monday. “Disputes in business are common, but both of these speak to the integrity of the management, not just ordinary business wrangling.”
http://www.nytimes.com/2011/04/05/business/05sokol.html?_r=1&adxnnl=1&src=busln&pagewanted=1&adxnnlx=1302008565-toLa303jX0FkB3ndH2wpJQ
I think what Sokol did with buying Lubrizol in the quantity he did at the time he did is quite clearly bad judgement on his part. When you are as rich as he is why push the envelope.
I have a little bit of a hard time reading the flood of negative articles about Warren that have come out as a result of this. But if I try and be objective about it the truth is that Buffett has brought this sort of criticism on himself.
Year after year Buffett has preached about ethics and how important reputation is. His compliments towards his managers are frequent and quite over the top. And his criticism of Wall Street is quite regular and harsh. There has to be a large number of people just sitting and waiting for any tarnish on the image of Buffett so that they can let him have it.
And when there is a bit of controversy Warren really isn't very open about it. I haven't ever heard any comments on Ronald Ferguson at General Re who was sentenced to jail time, or comments about Santulli at Netjets who once received a lot of praise from Buffett.
Here is the article on Sokol:
Lawsuits involving David L. Sokol after he joined Berkshire Hathaway suggest that management had some warnings about his rules-pushing nature long before his resignation last week for buying stock in a company shortly before Berkshire acquired it.
The most serious lawsuit centered on the accounting of an irrigation project by MidAmerican Energy, where Mr. Sokol was chief executive when Berkshire bought it in 1999.
In a rebuke last year, the judge ruled in that case that MidAmerican had improperly changed its accounting on the project and criticized Mr. Sokol directly. The change in accounting was “intended to eliminate the minority shareholders’ interests,” the judge wrote, awarding more than $32 million to the minority shareholders. The case had taken more than five years to work its way through the courts. During that time, Warren E. Buffett, the chief executive of Berkshire, expressed confidence in Mr. Sokol by broadening his portfolio beyond MidAmerican to include Netjets, a company that sells fractional use of private aircraft.
After Mr. Sokol took over Netjets in July 2009, some critics complained about his management style and his strategy for shrinking the company, which had been ailing even before the financial crisis did more severe damage.
Under Mr. Sokol’s direction, the aircraft company filed a suit last November seeking to learn which employees had provided information to Alice Schroeder, the author of “The Snowball,” the best-selling biography of Mr. Buffett. Ms. Schroeder declined to supply the information, and her lawyer characterized the action as a witch hunt. The suit was dropped on Monday.
The lawsuits would have been “yellow lights: if not danger signals, at least warning signs,” Ms. Schroeder said in an interview on Monday. “Disputes in business are common, but both of these speak to the integrity of the management, not just ordinary business wrangling.”
http://www.nytimes.com/2011/04/05/business/05sokol.html?_r=1&adxnnl=1&src=busln&pagewanted=1&adxnnlx=1302008565-toLa303jX0FkB3ndH2wpJQ
