Buffett to face regulators in General Re probe
ABC News Online
April 9, 2005
Star investor Warren Buffett will appear before regulators on Monday as part of a probe into accounting of non-traditional products in insurance, his holding company Berkshire Hathaway has said.
The US investigation takes in the Berkshire Hathaway subsidiary, General Reinsurance, which was involved in the HIH collapse in Australia.
Berkshire said in a filing that its General Re unit has been the subject of questions from regulators at the Securities and Exchange Commission (SEC), the New York Attorney-General's Office and the US Department of Justice.
General Reinsurance and General Re are indirect, wholly owned subsidiaries of Berkshire.
Regulators "have jointly interviewed a number of current and former officers and employees of General Re and General Reinsurance, and have indicated they plan to interview additional such individuals," Berkshire said.
News of the interview came amid a report in the Wall Street Journal that Mr Buffett gave a tip to regulators that led to the fall of ousted American International Group (AIG) chief executive Maurice "Hank" Greenberg.
Mr Greenberg will also land in front of regulators next week, according to the Wall Street Journal, which reported that Mr Buffett took previously undisclosed steps to provide documents describing a suspected transaction between Berkshire and AIG.
On Thursday, the SEC ordered AIG to stop any destruction of documents that might shed light on allegations of murky dealing.
Australian probeGeneral Re was asked in March by the Australian Prudential Regulation Authority to show why it should not face a formal investigation into its financial dealings.
General Re issued contracts to Rodney Adler's insurer FAI, which allowed it to boost its profit and loss statement in the year before it was sold to HIH.
HIH collapsed in 2001 with losses of $5.3 billion, making it Australia's biggest ever corporate failure.
Its demise is partially blamed on its takeover of overvalued rival FAI in 1998.