Wednesday, March 30, 2005

Buffett's Defense Begins

In a rare response to press reports (including a front page article in the Wall Street Journal here), Berkshire Hathaway, parent company of General Re, issued a rather terse press release (here) disclaiming any involvement of its CEO, Warren Buffett, in the $500 million reinsurance transaction between General Re and American International Group Inc. that triggered the downfall of AIG CEO Maurice Greenberg.  The press release states: "It was reported that Mr. Buffett was briefed on the 'nature' and 'structure' of the 2000-2001 reserve transactions between Gen Re and AIG. To the contrary, Mr. Buffett was not briefed on how the transactions were to be structured or on any improper use or purpose of the transactions." 

Buffett is scheduled to be interviewed by investigators from the SEC and N.Y. Attorney General Eliot Spitzer's office on April 11, the day before Greenberg is scheduled to be deposed under oath.  Unlike the testimony of Greenberg, at this point the meeting with Buffett will only be an interview, not an on-the-record proceeding.  That usually indicates the investigators view the person as a witness in the case and not a subject or target, although that can certainly change down the road.  Buffett cannot be happy with all the publicity swirling around Berkshire Hathaway, which has a number of subsidiaries and investments of whichGeneral Re is only a fairly small part, and I doubt there's much love lost between him and Greenberg at this point. (ph)

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