How World's fourth wealthiest man, Warren Buffett, lost Ôé¼643m to fraudsters
Afnews Editor
May 19, 2020
Warren Buffett, world's fourth wealthiest man has been swindled by a German manufacturing company of Ôé¼643million.
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This happened when the normally shrewd investor was made to pay four times more than he ought to have paid to buy Wilhelm Schulz, a family-run manufacturer of stainless steel based in Krefeld, western Germany.
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According to the finding of a New York arbitration court, Buffett's company, Precision Castparts Corp ought not to have paid more than Ôé¼156m for the German firm.
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It ordered Schulz to make up the difference of Ôé¼643m.
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After the ruling in the US, a state prosecutor in D├╝sseldorf is now investigating the pipe maker, under suspicion of severe fraud for forging documents and falsifying balance sheets.
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The forgery was done via Photoshopping of company orders and invoices, giving the notion that the company was doing very well.
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In February 2017 a unit of Buffett's Berkshire Hathaway Inc, Precision Castparts Corp paid Ôé¼800m (┬ú715m) to buy Wilhelm Schulz.
After an anonymous tip-off by a whistleblower in May the same year, however, the US holding company began to question whether key documents had been doctored to create the impression of a booming business.
In reality, the company Buffett had just purchased was struggling and at risk of bankruptcy.
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On 9 April a New York arbitration court ruled that the German company had systematically led investors astray in the run-up to the purchase and then tried to cover its tracks afterwards.
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"This is not a close case,ÔÇØ the panel said in a 132-page ruling. "The evidence strongly points to fraud, and there is little in the record to suggest otherwise.ÔÇØ
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Internal documents cited by the German newspaper Handelsblatt suggest some of Wilhelm Schulz's employees inflated the company's Ebitda - earnings before interest, tax, depreciation and amortisation - by simply scanning in letterheads of third companies and Photoshopping them to create fake orders and invoices.
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At least 47 business deals that had helped create the impression of a company on the up were completely fabricated, said Handelsblatt.
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— Afnews Editor