April 15, 2024

DealBook: Berkshire Fires Back Against Sokol’s Lawyer

Berkshire Hathaway has escalated its war of words with its former executive, David L. Sokol, who resigned last month after buying shares in a specialty chemicals manufacturer while orchestrating a potential takeover of the company.

A Berkshire director and lawyer, Ronald L. Olson, released a statement on Wednesday night saying that the company’s board had sought to interview Mr. Sokol about his $10 million stake in Lubrizol, contradicting earlier remarks made by Mr. Sokol’s lawyer.

Mr. Sokol declined that interview request, Mr. Olson said.

On Wednesday afternoon, the board released a scathing report accusing Mr. Sokol of misleading Berkshire about his Lubrizol trades and violating the company’s ethics and insider trading policies.

Mr. Sokol, once seen as a leading contender to succeed Warren E. Buffett atop the Berkshire empire, never told Mr. Buffett that he had bought his stake in Lubrizol after Citigroup bankers had pitched the company as a potential takeover target, the report said.

In response, Mr. Sokol’s lawyer complained that the directors had failed to question his client, the former chairman of MidAmerican Energy and NetJets, for the report.

“I am profoundly disappointed that the audit committee of Berkshire Hathaway would authorize the issuance of its report to the public without the care and decency to ask even a single question of Mr. Sokol,” said the lawyer, Barry W. Levine, of Dickstein Shapiro.

A few hours later on Wednesday, Mr. Olson disputed Mr. Levine’s statement.

“Mr. Sokol was interviewed at least three times regarding his Lubrizol trading activity and contacts with Citi bankers,” Mr. Olson, a partner at Munger Tolles Olson, said in the statement. “In connection with the preparation of the audit committee report, a request for a further interview with Mr. Sokol was made to his attorney. Mr. Sokol was not made available.”

Munger Tolles Olson, Berkshire’s longtime outside law firm, helped prepare the audit committee report, which was presented to Berkshire’s board on Tuesday night.

Mr. Levine did not immediately return a request for comment on Thursday.

On Wednesday, Mr. Levine disputed the audit committee report, saying that Mr. Sokol’s trading was above board. Mr. Sokol, his lawyer said, had been considering a personal investment in Lubrizol since summer 2010, before meeting with Citigroup in December to discuss the company.

Mr. Sokol, 54, resigned from Berkshire Hathaway after it emerged that he had personally bought about 100,000 Lubrizol shares shortly before bringing the company to Mr. Buffett’s attention in January. Berkshire later agreed to buy Lubrizol for $9 billion, causing Lubrizol’s shares to surge and increasing the value of Mr. Sokol’s holding by about $3 million.

Article source: http://feeds.nytimes.com/click.phdo?i=9eb3d26f3585d38748ab54abc4b5497b

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