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To: Poet who wrote (12206)	5/6/2002 11:47:13 AM
From: Lazarus_Long	Respond to of 21057

Wall Street loves a crook, says Buffett By Martin Strydom (Filed: 06/05/2002) WARREN BUFFETT, the Sage of Omaha who presides over an annual general meeting fondly known as "Woodstock for Capitalists", has told his shareholders that Wall Street loves a crook. Condemning the rise of corporate fraud in America, the Berkshire Hathaway chairman told a packed annual general meeting: "Many of the crooks look like crooks. Wall St loves them as long as they are pushing out securities." This year's jamboree attracted a record 15,000 crowd. It came in the wake of the September 11 terrorist attacks - which could cost insurers up to $70 billion - and accounting scandals that have lost billions for shareholders in companies like Enron. Mr Buffett, 71, warned investors at the Omaha Civic Center in downtown Omaha to watch out for companies which used the fashionable profits calculation known as ebitda - earnings before tax, interest, depreciation and amortisation. "They are either conning you, or themselves," he said. He also predicted that trading derivatives - a major business for collapsed energy trader Enron - would trip up other companies. "There's no place with as much potential for phoney numbers as derivatives," he said. Charlie Munger, Berkshire's 78-year-old vice chairman, added: "To say derivative accounting in America is in the sewer is an insult to sewage." General Re, the re-insurer owned by Berkshire Hathaway, is unwinding its derivatives unit. Enron came in for criticism. Mr Buffett called its behaviour "grotesque", and Mr Munger said: "Enron was the most disgusting example of a business culture gone wrong." Corporate greed was attacked, especially the way stock options are treated in company accounts. "CEOs have their hands on the switch," Mr Buffett said. "They get what they want every year; consultants just fan the flames." He is backing an attempt by Federal Reserve chairman Alan Greenspan to get regulators to force a change in stock option accounting, but is pessimistic that any changes will be made. He wants options to be treated as an expense, like other forms of compensation. "It's shameful," he said, that options are being accounted for in a way that boosts profits and dilutes the value of a company's shares for investors. Berkshire Hathaway's insurance units produced an underwriting profit of $20m (£14m) for the first quarter, reflecting premium growth of more than $1.8 billion. Berkshire's underwriting profit reflected an increase in earnings at car insurance unit Geico, which had a profit of $109m. General Re, which had an underwriting loss of $1.27 billion in the fourth quarter, reported a loss of $88m in the first quarter. Berkshire Reinsurance had an underwriting loss of $8m during the quarter. money.telegraph.co.uk