General Re Chairman and CEO Joseph Brandon, who had once been seen as a possible successor to Warren Buffett, has resigned. He apparently fell victim to pressure from the Federal government to have him ousted.
The departure, effective today (Monday), is revealed in a brief Berkshire Hathaway news release issued this morning.
Gen Re's President, Franklin "Tad" Montross, will take over as Chairman and CEO of Gen Re.
The Wall Street Journal reported one week ago that Federal prosecutors were "pressuring Berkshire Hathaway to replace" Brandon, after four other Gen Re executives were recently convicted in a series of bogus deals designed to artificially inflate AIG's earnings and its stock price several years ago. Brandon had been identified by prosecutors as an unindicted co-conspirator but had cooperated with the government.
At that time, I wrote about my concerns over allowing the government to "reach into the C-Suite and dictate who does, and doesn't run a company, without making any formal accusations, much less proving them."
"The government has no business using the threat of legal action to tell Warren Buffett, of all people, that one of his top executives doesn't have enough integrity for the job and should be fired. Prove it! See you in court!"
Easy for me to say, of course. It's tough to stand up to the government. Bloomberg quotes FTN Midwest Securities analyst Charles Hamilton as saying, "The pressure from the Securities and Exchange Commission and federal prosecutors was just too intense for them to keep him in his role."
Reuters notesthat Brandon was told by the SEC in 2005 that he could face charges he violated securities laws.
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