Home / Leadership/ Scandal taints Buffett’s status as American hero

Scandal taints Buffett’s status as American hero

Comments / {{hitsCtrl.values.hits}} Views / Thursday, 5 May 2011 00:00

OMAHA, Nebraska: There is nothing in the world quite like Berkshire Hathaway’s annual shareholder meeting. Part investment seminar, part stand-up comedy, it is above all a festival dedicated to capitalism and the firm’s CEO, Warren Buffett.

On Saturday, as many as 40,000 Buffett groupies, many of whom became rich through the firm, packed into a cavernous stadium in the rural state of Nebraska, listening with rapt attention to the pronouncements of the “Oracle of Omaha”.

If a nation sometimes sees itself reflected in one individual – India in Gandhi or Britain in Winston Churchill – then at least for these tens-of-thousands of Americans, that embodiment is Warren Buffett.

The ethos is “get up in the morning, work hard and hope for the best,” according to Chuck Doane, who has lived in Omaha since the 1950s and went to school with some of Buffett’s relatives before buying stock. “He’s a down to earth individual, upfront, forward with a lot of integrity,” he said of Buffett, while tucking into a sandwich.

At a time when profit-gouging Wall Street executives are still reviled for plunging the global economy into crisis, Buffett’s supporters see him as carrying the torch for responsible capitalism.

Despite being a multi-billionaire he takes home a salary of just $100,000 a year, has had the same house since the 1950s and prefers Cherry Coke over a chateau-made claret. “He’s got an evocation of the spirit of America,” said Lawrence Cunningham, a shareholder and 14-year meeting veteran who travelled with his pregnant wife to Omaha, to hear Buffett’s responses to questions from the crowd, which lasted nearly seven hours.

Cunningham, who has also compiled a book of Buffett’s writings, likens him to a modern day Will Rogers, the cowboy and entertainer of the 1920s, who became as famous for is self-depreciating modesty and witty aphorisms. “Countries all have their heroes, and the model of the hero in this country is very much home-spun wit, self-deprecation and modesty,” said Cunningham.

“And melting complex ideas into very memorable lessons for living, that’s very, sort-of, American.”

For decades Buffett has been doling out pithy business advice at Berkshire’s general meetings, and this year was no different. Amid questions from shareholders who had named their kids after him, Buffett offered advice on everything from buying gold (maybe not the greatest idea) to how to raise kids if you are rich (it’s your fault not theirs).

But at this year’s Buffett-fest, it was something the Oracle had not foreseen that drew the focus of the faithful. The meeting came just weeks after one of Buffett’s top lieutenants David Sokol resigned amid a share-trading scandal, a rare chink in the firm’s ethical armour.

Sokol bought $10 million worth of shares in chemicals firm Lubrizol before recommending Buffett snap up the company. Just what Buffett knew about the deal, and when he knew it, has drawn the interest of market watchdogs and the press. But most shareholders appeared much more concerned about what it meant for the Berkshire project and Buffett’s judgment.

According to Cunningham, “it might lead people to this anxiety, that there is no hero on the planet, even this guy, even this wonderful company, led by this halo-wearing fella has creeps at senior levels.” According to some, with Buffett approaching his 81st birthday, it also raised questions about who leads next, and whether Buffett’s choice will be the right one.

“The Sokol situation raises the succession question,” according to LJ Rittenhouse, who was attending her 14th meeting: “How could someone who was named as a possible successor turn out to have done something like this? And how do you replace a Warren Buffett?”

If it is any evidence the crowd still seemed content to lap up video skits portraying Buffett and his trusty sidekick Munger as action heroes, along with Buffett-branded peanut brittle, tee-shirts and books.

But part of the problem may be company’s own success, growing from a small investment company into a network of at least 52 firms that is listed on the S&P 500. “It is part of the growing pain,” according to Rittenhouse, who said Berkshire’s sheer size might make it difficult to always be a standard bearer for responsible capitalism, and one that cares about every employee and customer.

“The challenge he has now is running that kind of a business when you are a multi-billion dollar conglomerate,” she said.

Share This Article


1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.


Today's Columnists

In the desert of Tamil films, actor Sivaji Ganesan was an oasis

Saturday, 22 September 2018

‘Indian Film,’ first published in 1963 and co-authored by former Columbia University Professor Erik Barnouw and his student Dr. Subrahmanyam Krishnaswamy, is considered a seminal study of the evolution and growth of Indian cinema. The book is cit

Imran may turn blind eye to blasphemy law and persecution of Ahmadiyyas

Saturday, 22 September 2018

There are clear signs that Pakistan’s freshly minted Prime Minister, Imran Khan, will make a sincere effort to reduce corruption and maladministration in the domestic sphere. In foreign affairs he is likely to make a brave attempt to mend fences wi

The rate of exchange, capital flight and the Central Bank

Friday, 21 September 2018

The Central Bank (CBSL) exists for the sole purpose of price stability. Its controls on the financial system and monetary policy exist to maintain price stability. As put forth many times by the Governor, the failing of the CBSL to control inflation

Red flag over the Sri Lankan Navy

Friday, 21 September 2018

Shocking story Rusiripala, a former banker in Sri Lanka, who has taken to writing in Daily FT, is perturbed by the red flag I have raised (Daily FT article 18 September) over the shocking charge that our Navy had operated a ransom gang that had abduc

Columnists More