JOSEPH BRANDON, once considered a leading candidate to replace Warren Buffett at the helm of Berkshire Hathaway, has stepped down as head of its reinsurance division, General Re.
The departure of Mr Brandon, who will be replaced by his number two, Franklin "Tad" Montross, is a blow to Mr Buffett, who for years considered him one of his closest lieutenants.
Mr Buffett has repeatedly praised Mr Brandon's stewardship of General Re since his appointment as chief executive in 2001. In his latest letter to shareholders, released at the end of February, Mr Buffett said Mr Brandon and Mr Montross had been doing "first-class business in a first-class way".
Mr Brandon's departure follows the convictions of four former colleagues for fraud. He has not been charged with any wrongdoing. Mr Brandon was identified as a non-indicted alleged co-conspirator in a trial that resulted in the conviction of Ronald Ferguson, the previous chief executive, and three other former executives.
Mr Ferguson was found guilty of involvement in a scheme that inflated AIG's reserves by $500 million (€316 million) in a deal involving General Re's subsidiary Cologne Re, based at the Irish Financial Services Centre in Dublin. He will be sentenced on May 15th.
During the trial, some of the defendants claimed they believed the scheme was legitimate because it had been approved by senior executives, including Mr Brandon and Mr Buffett.
Hank Greenberg, who was ousted as chief executive of AIG in 2005 over accounting allegations, was also an unindicted co-conspirator in the case against Mr Ferguson, according to prosecutors. Mr Greenberg has denied any wrongdoing.
Mr Buffett, who was not charged and did not testify, has said he was unaware of the details of the reinsurance transaction.
In a statement issued yesterday, Berkshire said Mr Brandon had "decided to resign, effective today" and declined to comment further.
Mr Brandon could not be reached for comment.
Mr Buffett has given the Berkshire board a letter with the names of three candidates to replace him as chief executive. Berkshire watchers say Mr Brandon was on that list but had been removed. - ( Financial Times service )
