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Recently, Kraft Foods (NYSE: KFT) spent $18.4 billion to acquire British chocolatier Cadbury. Warren Buffett, the company’s key shareholder through Berkshire Hathaway (NYSE: BRK.A), said Kraft overpaid.

Friday, Reuters reported Kraft CEO Irene Rosenfeld said in less than five years she will be receiving a congratulatory card from Warren Buffett because the deal will be a success. Why does Rosenfeld care about a card from Warren since she has already made the deal a winner for herself?

This is a perfect example of what’s wrong with cronyism in corporate America. Rosenfeld has already enriched contacts at Cadbury and gained lifelong favors. If Warren and other shareholders invested hard earned money and Cadbury has a low ROI, 401ks will be harmed while Rosenfeld will simply move on to greener pastures.

We spend a lot of time rightfully focusing on public sector workers getting relocated rather than fired when they are incompetent. However, the same game is alive and well on Wall Street: incompetent executives hop from one company to another by working contacts and insiders. When other companies take a pass, hedge funds or consultancy shops usually step up. And in a worst case scenario, politics or an adjunct professorship will do.

But the bottom line is we have too many insiders enriching themselves rather than shareholders or customers. These insiders claim to be capitalists, but they are nothing more than well-groomed con artists.

Time will tell whether Rosenfeld benefited Kraft or merely her own base of contacts. But, in the words of Warren Buffett, I think the deal could be like the recent sale of Kraft’s frozen pizza business to Nestle (OTCPK:NSRGY) … “particularly dumb.”

Source: Is Kraft's CEO Putting Her Career Ahead of the Company?