US billionaire and business guru Warren Buffett’s company Berkshire Hathaway may be accused of playing a part in the collapse of HIH.

HIH liquidator Tony McGrath is reported to have flagged legal action against Mr Buffett’s General Re and Cologne Re for their alleged involvement in assisting FAI to cover-up suspect reinsurance deals.

Another Berkshire Hathaway reinsurer, National Indemnity, was also involved in the HIH debacle. It issued FAI a policy allowing the company to claim a pre-tax profit of $8.6 million for the year ended June 30 1998.

Berkshire Hathaway’s annual report says it could be sued over transactions its subsidiaries entered into with FAI almost three years before HIH collapsed.

“The liquidator contends that General Re and [Cologne Re] engaged in deceptive conduct that assisted FAI in improperly accounting for such transactions as reinsurance, and that such deception was a casual factor that led to the insolvency of HIH,” it said.

Last year the Australian Prudential Regulation Authority investigated General Re and disqualified seven of its executives for their alleged role in providing bogus reinsurance to FAI.