I found Warren Buffett’s letter on the resignation of his lieutenant David Sokol interesting in what it didn’t say. Buffett didn’t ascribe to Sokol any of the qualities that he and his partner Charlie Munger value so much. There was no mention of integrity, honesty or morals. The letter addressed the letter of law, “Neither Dave nor I feel his Lubrizol purchases were in any way unlawful.”

I find whether Sokol acted lawfully or not of little interest and if Buffett and Munger are men of their word, which they most surely are, then I doubt the legality of the situation is their primary concern. Buffett and Munger expect the highest level of integrity and ethics from their partners and there is no way Sokol’s actions can be characterised as that.

Here’s what Charlie Munger said at the 2004 Wesco Meeting.

“We think there should be a huge area between what you’re willing to do and what you can do without significant risk of criminal penalty or causing losses. We believe you shouldn’t go anywhere near that line. You ought to have an internal compass. So there should be all kinds of things you won’t do even though they are perfectly legal. That’s the way we try to operate.”

Sokol went very close to the line, perhaps he even foot faulted.

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