Jason Stipp: I am Jason Stipp for Morningstar.
We are here at the 8th Annual Value Investor Conference, and we are talking today with several Buffettologists--Buffett experts and authors--about the David Sokol incident and what it means for internal controls at Berkshire Hathaway.
Roger Lowenstein: I think what happened with Sokol brings out what might be Buffett's greatest managerial shortcoming--and by the way it's the other side of his great virtue--he is not a meddler. He delegates. He lets people run their own shows. He says, I am looking for businesses that already had management; he can't supply it. Usually that works. When the guy is the right guy, it works terrifically. But once in a while if the guy is not the right guy, that's not Buffett's strength. But, look, at the end of the day, he's gone. Sokol is gone.
Lauren C. Templeton: I think there are unethical people in every line of business, and this clearly was the case. I think it's impossible to totally protect yourself from unethical people. I think Warren Buffett runs a great business, and this is a very unfortunate situation.
Sham M. Gad: If you've read Buffett's letters for the past 10-20 years, he has made a very direct point that, he doesn't want to tolerate any playing around the edge of the court; it's all about playing center court. I don't think it's going tarnish Berkshire's internal controls. I think as a matter of fact Berkshire probably has better internal controls, more than most companies. So I think it's an unfortunate situation, and I think that's going to be end of it. Sokol is gone, and they are going to move on.
Scott Phillips: My impression of Berkshire Hathaway and Warren Buffett and the way he approaches his managers is, it's a cohesive environment of trust. There is deep trust in all the individual managers that they'll adhere to the code of ethics. Buffett has always described doing business on a handshake basis. So, I think that perhaps, maybe they were letting their guard down a little, not keeping an eye on things as much as you would find at other corporations. So that's possible.
John Price: I think it raises some concerns. I am not particularly worried about it. I think Warren probably slipped a little this time, but it is great that the audit committee came out with that report, and so I hope not too much time is wasted on it tomorrow at the Annual Meeting. I think that they are going to clear it away very well.