Buffett to testify in trial of his ex-officials

December 04, 2007|By New York Times News Service

The former executives — Federal prosecutors are expected to call Warren E. Buffett, the chief executive of Berkshire Hathaway, to testify in the trial of five senior insurance executives accused of helping the American International Group manipulate its finances through $500 million in fraudulent transactions, according to court papers filed yesterday.

The former executives - four from the General Re Corp., part of Berkshire Hathaway, and one from AIG - were indicted in 2006 on charges of fraud, conspiracy and lying to the Securities and Exchange Commission over what the government has called a scheme to inflate AIG's reserves.

In court papers filed yesterday, federal prosecutors said for the first time that Buffett was on the witness list. Buffett has said that he did not know the deals were improper. He has not been charged.

The defendants from Gen Re are Ronald E. Ferguson, the former chief executive; Elizabeth A. Monrad, the former chief financial officer; Robert Graham, the former assistant general counsel; and Christopher P. Garand, a senior vice president who was the chief underwriter. The AIG defendant is Christopher M. Milton, who oversaw reinsurance activities.

The case involves complex reinsurance deals intended to bolster balance sheets.

Two other crucial prosecution witnesses are John Houldsworth, the former chief executive of Cologne Re Dublin, a subsidiary of Gen Re; and Richard Napier, a former senior vice president for Gen Re who oversaw its relationship with AIG. Both men pleaded guilty to charges in 2005 and agreed to cooperate with prosecutors.

Opening arguments are scheduled for Jan. 7 in U.S. District Court in Hartford, Conn. Jury selection began yesterday.

The indictments of the five executives followed the resignation in 2005 of AIG's chairman, Maurice R. Greenberg, who was forced out after nearly four decades, amid concerns about possible accounting irregularities.

In 2006, AIG agreed to pay $1.64 billion to settle civil claims with federal and New York state authorities that it had engaged in deceptive accounting and bid-rigging.

Buffett said in the past that he was generally aware of the transactions but was unaware that they had been structured improperly or used improperly. He has cooperated with regulators and prosecutors.

But a lawyer for Monrad said at an early court hearing that Buffett knew the details of the transactions. According to a transcript of a hearing Oct. 10, the lawyer, Reid H. Weingarten, said: "The evidence is beyond dispute that he knew about the transaction. He certainly didn't stop it."

Ronald L. Olson, Buffett's lawyer, did not comment yesterday. Olson is on the board of Berkshire Hathaway.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.