German pipe manufacturer duped Warren Buffet

by   CIJ iDesk I
2020-07-03   09:50
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The superstar investor Warren Buffet doesn't make a lot of mistakes, so the fact that he got scammed while buying a specialized pipes manufacturer was surprising enough. Even more remarkable is the fact that it happened in Germany, a country whose financial regulators are still bright-red with shame over their failure in the Wirecard case. In a long expose in the New York Times, it's reported that a whistle-blower from within the company Wilhelm Schulz sent a manager at Buffet's investment company Berkshire Hathaway a warning by email. "There is a falsification of data going on," it warned the manager, who had been involved in the €800m take over just weeks before. To make a long story short, the company had presented itself as profitable, but was in fact nearly bankrupt. Not long before the deal went through, Wilhelm Schulz had been unable to make payments on a €325m line of credit from Commerzbank, but convinced the bank to lend it an extra €8m by claiming that it was about to collect payment on some large orders. The money was provided with the condition that if payments weren't made, the bank would take over the company. It later emerged that it had forged invoices and delivery reports by using Photoshop.