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Buffett's subpoena quashed

NEW YORK (Bloomberg) - Berkshire Hathaway Inc. Chairman Warren Buffett will not have to turn over some records sought by the former head of a subsidiary whose fraud trial starts on Monday.

Judge Christopher Droney, of US District Court in Hartford, Connecticut, ruled yesterday to quash a subpoena from Ronald Ferguson, former chief executive officer of General Reinsurance Corp. Mr. Ferguson, 65, wanted records of communications between Mr. Buffett and two top General Re executives to help support his claim that Mr. Buffett approved sham reinsurance contracts that helped American International Group Inc. inflate reserves by $500 million.

Mr. Ferguson and four others face criminal charges of conspiracy, securities and mail fraud, as well as making false statements. Defence lawyers subpoenaed Omaha, Nebraska-based Berkshire and Stamford, Connecticut-based General Re for copies of all written communications between Mr. Buffett and current General Re CEO Joseph Brandon and president Franklin "Tad" Montross for the year 2000.

Mr. Ferguson sought the records to show that the other two men had such frequent contact with Mr. Buffett that Mr. Ferguson would not have lied when he sent an e-mail to Mr. Brandon and Mr. Montross on November 6, 2000, indicating Mr. Buffett had approved the AIG transaction.

Mr. Buffett, 77, has denied knowledge of improper dealings. He did not immediately respond to a request for comment yesterday through Berkshire spokeswoman Jackie Wilson. A call to Mr. Ferguson's attorney Douglas Koff at Cadwalader Wickersham & Taft in New York, was not immediately returned.

Judge Droney ruled that the requested records were not "probative of whether Ferguson misrepresented Buffett's approval" of the deal to Mr. Brandon and Mr. Montross. Any direct communications between Mr. Buffett, Mr. Brandon and Mr. Montross regarding Mr. Buffett's approval of the AIG deal would already be in Mr. Ferguson's hands, because General Re previously turned over all written communications regarding the transaction, Mr. Droney said.

Last month, in a win for Mr. Ferguson, Mr. Droney ruled that Berkshire and General Re must provide the court with records from interviews with former and current employees during the companies' internal investigations. If those individuals give testimony at trial contradicting their earlier statements, the relevant documents may be given to the defense, according to Mr. Droney's ruling, filed on December 20.

Mr. Droney also ruled yesterday on subpoenas the defence issued to Verizon New York Inc. and Verizon Wireless Inc. seeking telephone records for numbers used by himself and other General Re executives. General Re opposed the subpoenas, and Mr. Droney ordered them enforced for the period from October 1, 2000, through to May 31, 2001.

The other defendants are former General Re chief financial officer Elizabeth Monrad, 53; Christopher Garand, 60, a former senior vice-president; Robert Graham, 59, former assistant general counsel; and Christian Milton, 60, the former head of reinsurance at New York-based AIG, the world's largest insurer.