Robert Lenzner, Forbes —
Don’t blame David Sokol’s craving to make a fortune and become a philanthropist on Warren Buffett’s understandable confidence that his leading heir-apparent would do nothing to embarass him and Berkshire Hathaway.
It was David Sokol’s personal responsibility to tell Buffett on January 25th latest that he owned 96,000 shares of Lubrizol worth $10 million that, excuse me , he had purchased the first week of January, 2011, ahem, just 18 days before the Jan. 25th decision to go ahead and negotiate for Lubrizol.
Then, Buffett would have realized he had to reveal this stock activity in the merger materials, which was going to be an embarassment– even if he had ordered Sokol to sell the shares before ANY negotiations.
This is not an issue of corporate governance, that mushy concept that obfuscates what you should be born with– an ingrained sense of what is right and what is wrong. Unfortunately, our celebrity culture has placed a priority on public excess, the insatiable need to be richer than the next guy, keep up with the private equity billionaires, the hip-hop entrepreneurs with diamonds in their ear lobes, the Donald Trumps of the world.
Read today about the Fannie Mae and Freddie Mac execs who were paid multiple millions personally and presided over public losses of billions. It’s time to pull “The Rich And The Super Rich, A Study of Money & Power And Who Really Owns America” out of the bookcase and remind myself of the prevailing culture.
The Oscar-winning documentary “Inside Job,” is deep-down a narrative of the insidious culture of financial entitlement, an invisible virus at work in the culture. Cut the school budget, layoff policemen, cannibalize training programs for the unemployed, don’t make GE pay any taxes etc. is the dark side of the culture of financial entitlement.
Here are some of the many examples of the virus at work in our recent history. The leading investment banker who is also chairman of the investment bank’s regulator who buys shares of the investment bank at a depressed price during the financial crisis with full insight as to public policy support for the institution, and never has his wrist slapped. Supported by his former partner, who once held a high cabinet post, who assured me there w as nothing wrong in taking advantage of inside knowledge to make an extra buck or two.
The leading executive of a public-private housing finance institution who brags to me that she got out just in time without being stained by the crisis, her extraordinary small fortune intact.
The phenomenon of a leading bank, JP Morgan Chase allowing $100 billion to be transferred back and forth between the crook of the century, Bernie Madoff and another major client of the bank. Or my alma mater, Goldman Sachs letting a hedge fund maven client pick out the lousy mortgages to go short in a public offering. Or Credit Suisse having to pay a fine of $535 million to the government for violating the sanctions against doing business with knave nations like Iran and the Sudan.
Just have a look at hedge fund biggie Raj Rajaratnam, blithley protesting his innocence of criminality in the biggest inside information trial ever, despite 19 guilty pleas by others caught in his dishonest web. Absurd.