Warren Buffett's company's bribery allegations against the Haslam family won't be decided in January
OMAHA, Neb.– Warren Buffett's company decided in January not to move forward with an expedited trial on bribery charges against the billionaire Haslam family under strict conditions set by a judge, but it will still be able to raise those concerns because a judge the Haslams' rival considers claiming that Berkshire Hathaway tried to squeeze the Pilot Truck Stop chain's revenues.
Both the Haslams and Berkshire have accused each other of trying to manipulate the profits of the country's largest truck stop chain, saying those figures will determine how much Berkshire will have to pay if the family decides to sell its remaining 20% stake in the company next year. expected. The two parties agreed on a formula in 2017 when the family decided to sell the first part of the company, with the price determined based on revenues.
The Haslams allege Berkshire is trying to keep revenues low with an accounting change at Pilot, while Berkshire says Cleveland Browns owner Jimmy Haslam tried to bribe executives at the truck stop his family ran to boost the company's revenues to conduct. The Haslam family consists of Jimmy Haslam and former Tennessee Governor Bill Haslam and their father who founded the company.
A Delaware judge had already scheduled a two-day trial in January on allegations the Haslams made about the accounting change in their original lawsuit in October. But the judge said that if Berkshire wanted to get a decision on its bribery charges at the same time, it should refrain from requesting additional evidence in advance and limit the number of witnesses.
It won't be clear until after the trial in January when Berkshire's bribery charges will be tried.
The Haslams received $2.758 billion in 2017 when Berkshire bought its initial 38.6% stake in Pilot and another $8.2 billion this year when it took control of 80% and became the majority shareholder. Buffett told Berkshire shareholders this spring that he would have preferred to buy the entire company at once because the price was better in 2017, but that the Haslams did not want to sell it all.
It is not clear exactly how much the remaining stake is worth. The Haslam family estimates the stake was worth $3.2 billion before the accounting change. Berkshire disputes that figure.
The Haslams' lawyer called that accusation a “wild invention,” but Berkshire said he believes Jimmy Haslam offered millions to at least 28 executives to take short-term measures that would boost profits.
Berkshire said it only became aware of the bribery scheme a few weeks ago after an executive who had been offered one of the bonuses came forward to the new CEO that Berkshire had appointed after it became the majority shareholder.
Although a verdict on the bribery charges will not be announced until January, Berkshire still plans to make them part of the defense against the Haslams' lawsuit.
Berkshire wanted the court to prevent the Haslams from exercising their option to sell the rest of the company to Berkshire next year because, according to the court, there are so many doubts about the accuracy of Pilot's 2023 earnings. The Haslams have the option to decide to sell at the beginning of each year under the agreement they signed in 2017.
Knoxville, Tennessee-based Pilot has more than 850 locations and approximately 30,000 employees in the United States and Canada and has already significantly boosted Berkshire's sales and profits this year.
In addition to the truck stops, Omaha, Nebraska-based Berkshire owns an eclectic range of other companies, including Geico Insurance, BNSF Railway and several major utilities, along with a number of smaller manufacturing and retail companies. It also has an extensive stock portfolio with major stakes in Apple, Coca-Cola, American Express and Bank of America, among others.