By Susan Edelman and Melissa Klein New York Post
Mayor Bloomberg has recruited fellow billionaire Warren Buffett to take over a taxpayer fund set up to pay claims stemming from the toxic Ground Zero cleanup, The Post has learned.
A surprise plan under review would give $270 million in federal funds managed by the World Trade Center Captive Insurance Co. — a nonprofit entity controlled by Bloomberg appointees — to Buffett’s holding company, Berkshire Hathaway, which would convert the cash into a $600 million commercial-insurance policy.
Buffett’s company would absorb the risk of new 9/11 litigation and health claims, though it’s unclear how much profit he stands to make on the deal. The city would receive no dividends, an official said.
Berkshire Hathaway is headed by the 83-year-old Buffett, ranked the second-richest person in the US after Bill Gates, according to Forbes. The Omaha-based conglomerate, which owns Fruit of the Loom, Dairy Queen, GEICO and dozens of other companies, last week reported a 29-percent increase in third-quarter profits with revenue growing to $46.5 billion.
A statement by WTC Captive given to The Post on Friday said a private insurer “would assume all liabilities” of the entity, which the city formed in 2004 with $1 billion from Congress to cover 9/11-related suits against the city. After years of litigation, the entity recently paid more than $668 million to settle 10,000 claims by Ground Zero rescue and recovery workers.
The statement, which did not name Berkshire Hathaway, said the transaction would provide the city and its Ground Zero contractors with “$330 million more insurance for 9/11 claims.” The plan would also make “more money available to respond to claims” after the federal September 11th Victim Compensation Fund closes in 2016, the statement says. Congress reopened the VCF in October 2011 with $2.7 billion to pay 9/11 responders, lower Manhattan residents and others disabled by toxic dust and smoke in the WTC attacks. More than 50 types of cancer are covered.
But experts expect a future wave of 9/11 workers to get cancers that take up to 20 years to develop. WTC Captive previously said it would stay in business until 2029 to defend the city against such suits. Under the new proposal, WTC Captive would “engage in an orderly wind-down of operations.”
Records obtained by The Post show the entity had $333.5 million in the bank as of September 30. It spends millions a year on lawyers and staff — CEO Christine LaSala makes $234,500 a year.
The commercial-insurance policy, the statement said, “would not terminate unless and until the entire limit of insurance is paid.”
A city Law Department spokeswoman said, “This will provide ongoing professional management of the fund and will more than double the total coverage available for potential future settlements.”
The deal — which needs the approval of Gov. Cuomo and FEMA — took 9/11 health advocates and local members of Congress by surprise.
“I have to look into this. It raises a lot of questions,” said Rep. Jerrold Nadler. “I don’t know how this will affect potential claimants. Will it make it harder or easier for them to collect?”
John Feal, an advocate for 9/11 responders, blasted the secret negotiations in the closing days of the Bloomberg administration.
“It just seems that two pompous billionaires are making a deal and not letting us know,” Feal said. “I think our elected officials need to know if this is a good thing or a bad thing for the 9/11 community.”
A source with knowledge of the deal said Berkshire Hathaway undoubtedly expects to make a profit.
“They’re doubling the insurance protection, but how is that economically possible? Are they making a bet that they won’t have to pay it off?” the source asked.