Warren Buffett, the famed American investor, will appear before investigators and regulators on Monday seeking the facts behind a questionable transaction at the heart of a widening inquiry into the insurance business.
The suspect transaction was between the world’s largest insurer, American International Group, and General Re, a reinsurance division of Mr Buffett’s Berkshire Hathaway.
Investigators believe it was structured to create the impression that AIG’s books were stronger than they really were.
The allegedly improper transaction cost the job of AIG’s chairman and chief executive Maurice “Hank” Greenberg last month. Mr Greenberg faces questioning on Tuesday.
According to the New York Times, authorities regard Mr Buffett as a cooperating witness in the investigation rather than a target.
The Wall Street Journal reported yesterday that Mr Buffett’s firm tipped regulators off about the AIG deal in return for leniency in a separate, unrelated case.
Mr Buffett is widely regarded for his common sense and integrity. His annual shareholder meetings, in which he dispenses nuggets of advice, have become a pilgrimage for budding millionaires.
A statement issued by Berkshire last week denied that he had any detailed knowledge of the reinsurance transaction. The investigation said Mr Buffett was not briefed on the structure of the deal “or on any improper use or purpose”.
Investigators, including New York attorney general Eliot Spitzer and the securities and exchange commission, are trying to establish whether AIG deliberately manipulated its books. Analysts fear the investigation could widen to other parts of the industry.
Last week AIG said inaccurate accounting would probably reduce the book value of the group by up to $1.7bn. The firm said it had examined transactions going back 14 years but was “not yet able to determine” whether it would need to restate prior earnings. It has delayed the filing of its annual results to the SEC by up to a month.
