Warren Buffett's Berkshire Hathaway conglomerate and its General Re insurance unit have been ordered by a US judge to comply with subpoenas from its former chief executive, whose fraud trial begins next month.
Ronald Ferguson (65) and three other former General Re officers are accused of helping American International Group (AIG) create sham reinsurance contracts to inflate its reserves by $500 million (€339.65 million) in 2000 and 2001, deceiving investors about the insurer's ability to absorb losses. Cologne Re Dublin, an IFSC-based subsidiary of General Re, is known to have played a central role in the transactions in question.
Judge Christopher Droney of US District Court in Hartford, Connecticut, has ordered that records from interviews with former and current employees during the companies' internal investigations be provided to the court. A ruling filed last week by the judge says the relevant documents may be given to the defence if those individuals give testimony at trial in conflict with their earlier statements.
The defendants formerly with General Re are Mr Ferguson; ex-chief financial officer Elizabeth Monrad (53); Christopher Garand (60), ex-senior vice president in charge of finite reinsurance; Robert Graham (59), ex-assistant general counsel. Also on trial is Christian Milton (60), ex-head of reinsurance at AIG. They are charged with conspiracy, securities and mail fraud, and making false statements. All have pleaded not guilty.
Mr Milton subpoenaed New York-based AIG, the world's largest insurer, for similar records from its investigation. AIG tried to block the subpoena, a motion Judge Droney denied in the ruling.
Mr Ferguson also wants jurors to see documents that he claimed show his former boss Mr Buffett approved the disputed transactions. He filed a separate motion on December 17th to force General Re to produce communications that may show his involvement with the so-called loss portfolio transactions.
Mr Buffett has denied knowledge of improper dealings. General Re asked a judge to reject its former chief's request.
"Mr Buffett denies that he passed judgment in any way on the challenged AIG/Gen Re transaction in November 2000 or at any other time," said Berkshire's lawyer, Ronald Olson.
Mr Buffett said in a March 2005 statement that he "was not briefed on how the transactions were to be structured, or on any improper use or purpose of the transactions". He stands by the statement, Mr Olson said.
AIG last year agreed to pay $1.64 billion to settle probes of sales and accounting practices that led to the ousting of Maurice "Hank" Greenberg, the company's former chief executive. Defence filings identify Mr Greenberg as an unindicted co-conspirator. Mr Greenberg has denied any wrongdoing.
Berkshire spokeswoman Jackie Wilson said Mr Buffett was unavailable for comment. - ( Bloomberg)
