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Portfolio > Investment VIPs

Buffett, Munger Talk Sokol, Succession, Bankers at Berkshire Meeting

By Marlene Y. Satter

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At Berkshire Hathaway’s annual meeting over the weekend, both CEO Warren Buffett and Vice Chairman Charlie Munger had some colorful terms for recent events.

Buffett termed the situation surrounding David Sokol and the acquisition of Lubrizol "inexplicable and inexcusable," and said that the company did not plan to make any large changes to the way it oversaw its managers despite Sokol’s fall from grace. And Munger said after Berkshire’s press conference on Sunday that the involvement of investment bankers in helping to hide the gravity of Greece’s debt situation was “perfectly disgusting.”

Idavid sokoln a CNBC report, Buffett said he had “obviously made a big mistake by not saying, ‘Well, when did you buy it?’ ” when Sokol (right) first mentioned owning shares of Lubrizol stock in January. Terming “inexcusable” Sokol’s failure to abide by the company’s code of ethics, and "inexplicable" why Sokol did what he did in the first place, Buffett nonetheless said that Sokol’s actions did not mean that Berkshire planned to change its loose oversight of managers.

Commenting on his as-yet-unnamed successor, Buffett said that the next head of Berkshire would be an ethical leader but won't have to know how to run all the businesses owned by Berkshire. "The next CEO will do it his own way, and he will almost certainly change some of it," he said.

NPR reported that Munger commented on the Sokol situation by saying that Berkshire operates on a shared trust system, and with very few incidents to mar its record, saw no reason to change that. He said, "We have kind of a near-miss of a scandal every 25 years. I don't think we're going to get much lower than that."

Bloomberg News reported that Munger also had harsh words for Wall Street investment bankers for their role in the European debt crisis. Criticizing both the Greek work ethic and Wall Street, he said, “Wall Street to some extent is deliberately trying to profit from sin, and I think it’s a mistake.” At the post-meeting press conference on Sunday, Munger said to reporters, “Why should an investment banker go to Greece to teach them how to pretend their finances are different from what they really are? Why isn’t that a perfectly disgusting bit of human behavior?”

He compared the European debt situation to a business partnership in which six productive partners add a seventh who doesn’t want to work but instead gets drunk and lets the other six support him—until the six decide not to let him.

Munger has been outspoken in his criticism of bankers for greed, and also voiced his opposition to aid for distressed borrowers in the U.S. At the press conference he went farther, saying that Greece “cheated on the accounting and the investment banks helped them cheat. I don’t see why a bunch of Dutch and Germans should save them.”

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