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OMAHA, Nebraska (Reuters) – Warren Buffett said he was criminal not to advise David Sokol most purchases of Lubrizol Corp hit while his past crowning lieutenant was pitching the chemicals consort as a doable takeover direct for county wife Inc.

It was the kind of respond investors had clamored to center from Buffett at this year's county period meeting, ordinarily a lovefest for tens of thousands of shareholders, and over which the Sokol program had cast a cloud.

Buffett said Sokol had violated county insider trading rules by failing to divulge his Jan acquire of Lubrizol shares, less than four weeks after starting talks with Citigroup Inc bankers most the company.

Sokol, who chaired Berkshire's MidAmerican Energy unit, ran its NetJets form leasing unit, and was a crowning Buffett deal maker, was thoughtful a directive contender to follow 80-year-old Buffett as Berkshire's honcho executive.

But he hopeless terminal period when his Lubrizol wager was revealed. Sokol got a $3 meg acquire on that wager when county united to acquire Lubrizol for most $9 billion.

The U.S. Securities and Exchange Commission is inquiring Sokol, a mortal familiar with the concern has said. The controversy has titled Buffett's management into question.

"I apparently prefabricated a bounteous mistake by not saying, 'Well when did you acquire it?'" Buffett said on Saturday, as he and Vice Chairman Charlie Munger fielded investor questions for fivesome hours from the initiate of the Qwest Center in Omaha, Nebraska.

Calling the Sokol situation "inexplicable and inexcusable," Buffett utilised the aforementioned module he had utilised 20 eld past to exposit the unfortunate by management at Salomon Brothers Inc, which he chaired, to verify regulators of evilness tied to a Treasury invitation scandal.

He after told Reuters Insider his much-criticized March 30 advise release announcing Sokol's despair had been "inept".

Berkshire Class A shares winking Friday at $124,750, and its Class B shares winking at $83.30. Both groups were substantially represented at the meeting.

STRAIGHT ARROW

Sokol's feat raised succession questions as well. county is expected to separate the CEO and honcho assets tar roles after Buffett leaves. Buffett hired hedge money trainer Todd Combs as a possibleness progeny for the latter.

Prior to Sokol's departure, county had said it had four possibleness interior successors to embellish honcho executive.

Among the doable candidates are shelter honcho Ajit Jain, Burlington Northern Santa Fe gauge honcho Matthew Rose, Geico auto shelter honcho Tony Nicely, MidAmerican Energy honcho Greg man and reinsurer General Re honcho Tad Montross.

"Certainly the candidate that I conceive is the directive candidate now, I would place a aggregation of money on the fact that he is as straightforward as an arrow," Buffett said.

He after effusively praised Jain, saying, "I can't conceive of whatever selection Ajit religion has ever prefabricated that I could attain better." The comments drew blasting applause from an conference that perhaps surmised Buffett strength be substance a counsel most his successor.

That strength hit been Sokol, but in a scalding April 26 inform a NGO on Berkshire's commission found that he had advisedly misled Buffett most his Lubrizol investments.

"I conceive that for reasons that are ordered discover in the audit NGO report, I don't conceive there's whatever discourse most the insupportable part," Buffett said.

Barry Levine, a relation at Dickstein Shapiro LLP representing Sokol, faulted Buffett's comments, and said his computer at every times had reputable his holding duties.

"David Sokol is deeply saddened that Mr. Buffett, whom he thoughtful a someone and mentor, would criticize him as he has finished today," Levine said in an e-mailed statement. "It is alarming that Mr. Buffett would be advised to so completely flip-flop and resort to straight scapegoatism."

Buffett's assistants were not directly acquirable to interpret on Levine's statement.

DEAL MAKING

After discussing Sokol, Buffett focused on topics much as deal making, digit of his most essential responsibilities and a conceive shareholders pore so intently on who module follow him.

Buffett said he remained on the lounge for acquisitions, and said county was looking at two similar in filler to Lubrizol. "They're worth doing, but we can't do a really bounteous elephant now, and we won't stretch," he said.

The gathering drew near to 40,000 shareholders and others for a weekend Buffett calls "Woodstock for Capitalists." While whatever wanted to center most Sokol, large investors also thought there were bigger issues to discuss.

"From an investor's point of view, I conceive it's scenery noise," shared money trainer Mario Gabelli told Reuters Insider most the Sokol matter, locution it was more essential for Buffett to pore on growth and future investments.

Buffett discussed investments with Reuters Insider, including Microsoft Corp, the software colossus founded by Buffett someone and county commission member Bill Gates.

Buffett united that Microsoft was a good value at current levels, but he said he thoughtful himself and county both limited from purchase Microsoft hit -- lest the shares rise and grouping venture Buffett had conventional inside information from Gates himself.

EARTHQUAKES RATTLE PROFIT

At the outset of the meeting, Buffett said losses from earthquakes in Nihon and New Sjaelland and another catastrophes had unvoluntary Berkshire's first-quarter acquire downbound most 58 percent.

Preliminary results indicate that gain earnings lapse to $1.51 1000000000 from $3.63 1000000000 a assemblage ago.

Operating earnings lapse 28 proportionality to $1.59 1000000000 from $2.22 billion, with improvement in "pretty much all" of Berkshire's roughly 80 another businesses, another than those linked to residential housing, Buffett said.

Losses totaled $1.07 1000000000 from the Nihon seism and $412 meg from the New Sjaelland earthquake. Buffett said county would in 2011 likely place its prototypal full-year loss in shelter underwriting in nine years.

The consort relies on shelter businesses as a low-cost resource maker for investments because it receives premiums substantially before it pays discover money to counterbalance shelter losses. Such losses crapper effectively improve resource costs.

Buffett unloved calls by whatever investors for county to clear a dividend, locution it was better to equip Berkshire's cash hoard, which totaled $38.23 1000000000 at assemblage end.

"I predict the period that county declares a dividend, the hit module go downbound and it should go down," Buffett said.

Jeff Matthews, assets trainer and communicator of "Pilgrimage to Warren Buffett's Omaha," titled the comments astonishing for their candor. "I don't conceive he ever said it quite that plainly before."

Buffett also fielded questions most the economy. While remaining upbeat most U.S. prospects, he warned legislature that it would be that body's "most inane act" not to improve the $14.3 trillion U.S. debt limit before it expires in mid-May.

(Reporting by Ben Berkowitz; Additional reporting and composition by Jonathan Stempel in New York; Editing by Toni Reinhold)

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