This is an on-going story and since this was written more has happened but it’s important to at least note the trial has begun.
It’s been 11 years since then New York Attorney General Eliot Spitzer sued then AIG founder and CEO Maurice “Hank” Greenberg and his Chief Financial Officer Howard Smith. Spitzer — who later earned the nickname the Sheriff of Wall Street — said the two cooked the company’s books. He later took on other insurance topics like contingencies with Marsh & McLennan and other firms and radically — at least for a while — changed the face of insurance.
The Greenberg-Smith accusation filed in 2005 says the two added transactions that weren’t real to the books to make it appear AIG was in better financial condition than reality.
In the decade plus a year Greenberg’s legal team has managed to negotiate tricky legal turf in order to avoid trial and have the case dismissed. Spitzer’s successors now governor Andrew Cuomo and current AG Eric Schneiderman refused to budge and eventually the state supreme court said the trial will happen.
Spitzer’s charge contends the books were pumped up by $3.4 billion dollars between 2000 and 2001 to hide hundreds of millions in losses. The scandal led to Greenberg’s resignation and a $1.64 billion settlement with neither man admitting or denying guilt.
In his opening, New York Assistant Attorney General David Ellenhorn said, “The public deserves to know, and we’ll establish during this case that the CEO and CFO and senior officials who cause their corporations to commit major public frauds will be held accountable.”
Greenberg’s attorney David Boies said, “This case is devoid of any admissible evidence that ties Mr. Greenberg to anything that was improper with either of these transactions.”
Time and — since this is not a jury trial — Supreme Court Justice Charles Ramos will decide whether Boies is correct. In the meantime, New York is not going after damages after all this time but it does want Greenberg and Smith to cough up the $53 million in bonuses they received for what — at the time — was a job well done.
Source links: Insurance Journal, Insurance Business America