Judge: No Discussions Of AIG Accounting, Bonus Probes
June 15 2009 - 10:54AM
Dow Jones News
A federal judge said Monday that American International Group
(AIG) can't mention investigations into the insurer's accounting
that led to the 2005 departure of former Chief Executive Maurice R.
"Hank" Greenberg in a dispute over control of Starr International
Co.'s ownership stake in the insurer.
U.S. District Judge Jed S. Rakoff in Manhattan also ruled
Starr's lawyers can't bring up recent probes into the insurer's
controversial payment of retention bonuses to some employees last
fall after it took billions of dollars in government bailout
money.
"This is a case about an alleged trust and an alleged conversion
of valuable share. It's not a forum for airing all the innumerable
other issues - many of which are unresolved - about Mr. Greenberg,
Starr, AIG bonuses, investigations and what have you," the judge
said.
AIG claims Greenberg seized control of Starr International, or
SICO, in March 2005 after leaving AIG and reneged on an arrangement
where a large block of AIG shares controlled by Starr International
was used to fund a deferred compensation plan for select AIG
executives.
The block is worth more than $4.3 billion and includes shares
sold by Starr in recent years. The shares went to Starr in 1970 as
part of a reorganization of AIG and its affiliates.
Jury selection is expected to begin in the federal case later
Monday. A similar lawsuit between AIG and Starr is pending in state
court in New York.
The trial is expected to last about a month. Greenberg is
expected to be called as a witness as soon as Tuesday.
Greenberg left AIG in 2005 in the midst of probes into the
insurer's accounting, including a high-profile investigation by
then-New York Attorney General Eliot Spitzer.
AIG has faced numerous investigations over $165 million in
retention bonuses paid to members of its AIG Financial Products
unit after it received federal government help. The Financial
Products unit has been blamed by some, including New York Attorney
General Andrew Cuomo, for AIG's near-collapse last year.
-By Chad Bray, Dow Jones Newswires; 212-227-2017;
chad.bray@dowjones.com