Talkative Buffett silent on AIG deal inquiry

Berkshire Hathaway chief executive Warren Buffett told 20,000 shareholders at the group's agm that he could not offer details about his involvement in a questionable reinsurance transaction at the centre of state and federal regulatory probes.

But he did hold out the rare prospect of a cash dividend for his shareholders as the group struggles to find buying opportunities for its $43 billion (€33.4 billion) cash pile.

Regarding the investigation of a transaction between a Berkshire Hathaway subsidiary and American International Group (AIG), Mr Buffett said investigators did not want witnesses talking publicly about their testimony.

Beyond the AIG issue, Mr Buffett, the world's second-wealthiest man, sharply criticised attempts to partially privatise Social Security, blasted the New York Stock Exchange's plans to go public and said Berkshire lost money on foreign currency contracts in the first quarter of 2005 but would maintain its bet against the dollar.

Mr Buffett said Berkshire's currency bets cost the firm $310 million in the first quarter, after providing $1.8 billion in pre-tax gains last year. He said the firm has about $21 billion in foreign currency contracts and he continues to believe the dollar will fall. He said he fears that the growing US trade and budget deficits could cause foreign investors to abandon dollar-denominated assets.

Mr Buffett also repeatedly lamented that the company is having difficulty finding opportunities to deploy $43 billion in cash. He said private equity firms and hedge funds bidding for companies were driving acquisition prices too high.

He said if Berkshire could not find a way to use its money soon the firm might pay a cash dividend, something Berkshire almost never does. He also said he might soon announce an insurance company acquisition worth nearly $1 billion.

Mr Buffett declined to discuss details of his role in the insurance deals being examined by regulators, but he did address the issue more broadly.

Mr Buffett told investigators he was briefed on a transaction that took place in two parts in late 2000 and early 2001 between a Dublin subsidiary of Berkshire Hathaway company, General Re, and AIG, the world's largest insurance company. He said he was not aware of details of the deal, which is at the heart of a probe into a number of complex insurance transactions.

A Berkshire shareholder on Saturday asked what would happen if one side of a transaction accounted for a deal correctly but the other did not. "Certainly if you know you are doing something that causes a company" to engage in fraud "you may have some serious obligation on that ", Mr Buffet responded.

He also spoke highly of ousted AIG chairman Hank Greenberg. "Hank Greenberg was the number one man in insurance."

The issue of who will succeed Mr Buffett, 74, was a big topic at the agm and all the chatter focused on one man: Microsoft founder Bill Gates, a friend of Buffett's, who was elected a Berkshire director on Saturday.