Warren Buffett: World's Greatest Investor

From the Wall Street Journal: 

Mean Street: Waiting for Mr. Buffett’s Apology
by Evan Newmark   March 31, 2011

It’s long been my belief that you could never be too cynical about our leaders on Wall Street or in Washington.

But given the recent revelations over insider dealing at the Galleon Group and now David Sokol’s greasy wheeling and dealing with Lubrizol, it’s clear, that I was way too forgiving.

You can never be too cynical about any leader in America. Even Warren Buffett.

Did Buffett break the law in allowing Sokol, his employee, to front-run Berkshire Hathaway’s proposed acquisition of Lubrizol? Almost certainly not.

But has Buffett conducted himself in line with his own high ethical standards, in a way befitting America’s most revered corporate leader?

Sorry, President Obama and the rest of you Buffett fans, it’s not even close.  As my WSJ colleagues make clear, the timeline of Sokol’s purchases of Lubrizol shares makes for an ugly fact pattern.

Buffett showed a distinct lack of interest in the exact size and timing of Sokol’s actual share purchases. And judging by yesterday’s press release, Buffett appears untroubled by how Sokol came up with the Lubrizol acquisition opportunity in the first place.

Remember Sokol was sent material by Citi’s investment bankers not its private wealth managers. In his CNBC interview, Sokol was a bit fuzzy on the details. But it’s clear he met with Citi and asked for a meeting with the Lubrizol CEO as a representative of Berkshire Hathaway, not in his own private capacity.

Does Mr. Buffett allow all of Berkshire’s senior management to pick and choose their shareholder duties as they see fit? Or is it only his heir apparent that he let get away with such outrageous behavior?

Not that Sokol or Buffett consider the behavior outrageous. Sokol seemed unaware of the problem on CNBC this morning.

And Buffett’s press release said nothing about Berkshire’s own Code of Conduct. It’s also apparently his final word on the matter. “I have held back nothing in this statement. Therefore if questioned about this matter in the future, I will simply refer the questioner back to the release.”

It’s no surprise that the terse defensiveness of Buffett’s press release reminded me of the fierce denials that have come from Rajat Gupta’s lawyer in the Galleon proceedings.

Put aside the “legality” of Gupta’s various chats with his buddy Rajaratnam. Gupta engaged in behavior that by the standards of the senior partner world-wide (emeritus) of McKinsey and Goldman Sachs board member were clearly wrong.

What standard is Buffett using to evaluate his and Sokol’s behavior?  Is it the law? Or is it an even higher standard that is founded on acting beyond reproach?

It should be the latter, but today in America, it rarely is. For years, we’ve been easy on our leaders. We’re too quick to excuse their failings, too eager to make them “human.”

Think of Clinton’s and Spitzer’s extra-martial affairs. Think of the many violations of NCAA football and basketball coaches. Think of the Wall Street CEOs who ended up bankrupting everyone but themselves.
Of course,  leaders make mistakes. But the most disturbing element of these mistakes is just how out of touch our leaders often seem.

In many instances of wrongdoing, we’re not talking about “gray” situations.  We’re far into the realm of  “just what was that guy thinking?”;  Clinton in the Oval Office with Lewinsky;  Gupta calling Rajaratnam 23 seconds after his Goldman board call; Buffett sanctioning Sokol to deal on Berkshire’s behalf while buying shares on his own account.

Does America still have leaders who can see the world as the common man might? Does America still have leaders who haven’t let riches or public adulation go to their head?

Until now, you would have thought the Oracle of Omaha would be just that leader.  And you would have been wrong.

http://blogs.wsj.com/deals/2011/03/31/mean-street-waiting-for-mr-buffetts-apology/