NYT: Investigation of Insurance Puts Buffett in a Spotlight

[DeepModem Mom]

Investigation of Insurance Puts Buffett in a Spotlight
By TIMOTHY L. O'BRIEN

Published: March 28, 2005


Over the last four decades, Warren E. Buffett has built Berkshire Hathaway into one of the world's largest and most successful insurers. Along the way, he has navigated the stock market with legendary prowess and offered folksy guidelines for proper corporate governance.

Now, with investigators on three continents examining Berkshire affiliates and a deadline looming tomorrow to respond to an Australian regulatory inquiry, Mr. Buffett's company is in the unfamiliar position of having to defend its integrity.

Berkshire insurance affiliates run by Mr. Buffett's most trusted deputies are involved in what investigators describe as possible financial manipulation at insurance giants like the American International Group and the Zurich Financial Services Group. Investigators are examining Berkshire transactions that they say helped lead to the collapse four years ago of an insurance company involved in the biggest financial scandal in Australian history.

Investigators say they have traced many suspect transactions to a Berkshire subsidiary in Dublin, where at least two Berkshire executives who were recently banned from the Australian insurance market for engaging in abusive practices continue to work for the company.

Investigators are trying to determine the extent of Mr. Buffett's knowledge of the deals, which remains unclear. The involvement of other senior executives based in the United States, Ajit Jain and Joseph P. Brandon, and Ron Ferguson, a retired Berkshire insurance executive, is also unclear; all three men oversaw insurance operations that sold products at the core of international regulatory scrutiny. None of the executives has been charged with wrongdoing....


http://www.nytimes.com/2005/03/28/business/28buffett.html