By Ben Berkowitz
OMAHA, Nebraska (Reuters) - It could be the toughest weekend Warren Buffett has ever had.
Tens of thousands of Berkshire Hathaway shareholders are descending on Omaha for the conglomerate's annual meeting, known as "The Woodstock for Capitalism." But there appears to be only one topic of conversation in town -- Berkshire's extraordinary claims about the behavior of one of its top executives.
While the Berkshire board's scathing condemnation of former Buffett lieutenant David Sokol on Wednesday may have been crafted as an attempt to exonerate Buffett himself, it has left plenty of open questions. Buffett's public wants answers to them this Saturday.
"I think he's dotted his I's and crossed his T's from a legal standpoint but not much more than that. That's sad for Warren Buffett, because I think he believes the statements that he makes," said Paul Argenti, professor at the Tuck School of Business at Dartmouth College.
"He's the best and I expect the best from him, and I think that's why everyone is so disappointed," said Argenti, who has had Buffett appear in his classes in the past.
Berkshire's board released an 18-page report by its audit committee this week examining the behavior of Sokol, the former MidAmerican Energy chairman who was widely held to be Warren Buffett's presumed successor at the helm of Berkshire. The damning report suggests Sokol misled Berkshire about his personal investment in Lubrizol Corp.
It was an extraordinary disclosure, and one sure to change the tone of the annual meeting Saturday -- ordinarily a Buffett lovefest that he has described as capitalism's version of Woodstock.
"It's clearly going to send a message," YCMNET Advisors Chief Executive Michael Yoshikami, a Berkshire shareholder, said earlier this week of how the report would affect the hordes attending the annual meeting.
SHIFT IN FOCUS
From a legal standpoint, if the goal of the report was to shift the focus of the story back on to Sokol and ease the pressure on Buffett, most experts think it succeeded.
While the report makes it clear that Buffett was essentially duped by one of his top lieutenants, it also emphasizes repeatedly that any deception was purely Sokol's and likely intentional.
"With one quick disclosure, Berkshire is essentially agreeing with the public and the press and pinning the blame entirely on Sokol," said Jay Brown, a law professor at the University of Denver.
Buffett will still face tough questions on Saturday about what happened -- particularly his statement in late March that he did not feel Sokol had done anything unlawful, a conclusion the audit committee report appears to contradict.
The question, however, is whether there actually is a contradiction.
"It may well be that the real purpose of the statement was to correct Buffett's statement, announce the internal ethical rules within (Berkshire), and close the story once and for all," said Tamar Frankel, a professor of law at Boston University.
(Reporting by Ben Berkowitz, additional reporting by Moira Herbst in New York; Editing by Bernard Orr)