Legal, Schmegal: Buffett orders crackdown on unethical practices

Let's have a big hand for Warren Buffett! The big guy may be in his dotage, but obviously the mind is still razor sharp. Buffett says Berkshire should "start with what is legal, but always go on to what we would feel comfortable about being printed on the front page of our local paper".

Buffett has ordered top managers at his Berkshire Hathaway group to redouble efforts to crack down on unethical behaviour, warning that practices such as stock options backdating cannot be justified because "everybody else is doing it".

In a strongly-worded memo dated September 27 and sent to an elite group of Berkshire managers dubbed "The All-Stars", the veteran investor says "bad behaviour" among the insurance and energy conglomerate's 200,000-plus employees is "inevitable".

"But we can have a huge effect in minimising such activities by jumping on anything immediately when there is the slightest odour of impropriety… Berkshire's reputation is in your hands," the memo – obtained by the Financial Times – says.

The "Sage of Omaha" warns that poor corporate governance cannot be forgiven just because the practice is widespread. "The five most dangerous words in business may be 'everybody else is doing it'," wrote Mr Buffett, who has long been sceptical of stock options as a means of remunerating executives.

http://msnbc.msn.com/id/15199920/