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Warren Buffett allegedly conned by German company

Legendary value investor Warren Buffett's company has won EUR 643 million in arbitration after it was allegedly conned by a German company which inflated its revenue before its acquisition.

Berkshire Hathaway's Precision Castparts paid EUR 800 million in February 2017 to acquire a German, family-run stainless steel pipe and fittings manufacturer Wilhelm Schulz.

However, about three months later in May, Berkshire started to investigate the company after a tip off from a whistleblower, The Guardian reported.

The German manufacturer fabricated at least 47 business deals by photo-shopping letterheads of companies to create fake invoices and orders, according to the Guardian story which cites German newspaper Handelsblatt.

The effect was the EBITDA of the German manufacturer, and hence its acquisition value, were wildly inflated.

Buffett's Precision Castparts Corp pursued the case in the New York Arbitration court, arguing that William Schultz was worth EUR 157 million at max instead of the EUR 800 million that it paid for it.

In an April 8 ruling, Castparts won orders for the German company to pay it EUR 643 million to account for the difference.

Wilhelm Schulz's former owners have rejected Castparts' allegations and filed a complaint in a US federal court on April 28, according to The Guardian.

The newspaper also reports that a German state prosecutor is investigating Wilhelm Schultz for suspected fraud for forging and falsifying documents.

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