Wednesday, June 17, 2009

AIG contends former CEO stole billions from retirement fund

by Mark Fightmaster
Jun 16th 2009

In what an attorney calls a story of "anger, betrayal and cover-up," we are learning that former American International Group (NYSE: AIG) CEO Maurice "Hank" Greenberg may have taken $4.3 billion in stock from the company in 2005.

This "withdrawal" reportedly occurred shortly after Greenberg was forced out of the company as he was being investigated for accounting irregularities. Attorney Theodore Wells told a jury in Manhattan yesterday that Greenberg "was mad. He was angry," deciding to give the okay to tens of millions of shares being sold from a trust fund shortly after being jettisoned from the company. The fund was put together to provide incentive bonuses to a group of AIG management and employees that they would receive when they retired.

According to Wells, several clips of Greenberg on videotape discussing the responsibilities of the trust fund were Greenberg's "videotaped confession." Greenberg contends (through his lawyers) that he could sell the shares because they were owned by Starr International, which was a privately held company he controlled. Greenberg's lawyer, David Boies, told the jury that the shares Greenberg sold did not belong to AIG, noting "I disagree with a great many things that Mr. Wells said." Boies told the jury that investigating the documents in the case prove that the sold shares did not belong to AIG. Boies said, "Look in this case not to what people said after this lawsuit started ... Look to what they said and did and wrote before the lawsuit started."

The jury was asked to award AIG $4.276 billion and 185 million AIG shares. This suit kicked off before AIG was criticized earlier this year over its bonus program.

I find this revelation interesting, as it simply deepens the drama surrounding AIG. This company can't keep itself out of the news -- one way or another. Should Greenberg be found guilty? Should the government go after him? Remember, the government gave AIG $182 billion in aid to keep it afloat (of course, some of that money went to pay bonuses). This saga could be very interesting to monitor, especially if Greenberg is found guilty and the government then steps in.

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