Buffet Warns Berkshire Hathaway Managers Not To Go With The Flow

by Glen Shapiro, LawAndTax-News.com, New York

11 October 2006

In a memo to more than 45 of Berkshire Hathaway's top managers, investment guru Warren Buffet has urged them not to attempt to justify corporate misdoings by pointing to the behaviour of their peers.

Commenting on the growing number of executives at other firms falling foul of US rules on stock option backdating, Mr Buffett observed that:

"My guess is that a great many of the people involved would not have behaved in the manner they did except for the fact that they felt others were doing so as well."

He went on to add that:

"A lot of banks and insurance companies have suffered earnings disasters after relying on that rationale. Even worse have been the consequences from using that phrase to justify the morality of proposed actions."

He reportedly suggested to the managers that they should act in such a way that they would be comfortable with their actions being subjected to public scrutiny.

According to the Wall Street Journal, he summed this up as follows:

"So, at Berkshire, let's start with what is legal, but always go on to what we would feel comfortable about being printed on the front page of our local paper, and never proceed forward simply on the basis of the fact that other people are doing it."

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