AIG's Hank Greenberg Faces New Attack

by Glen Shapiro, LawAndTax-News.com, New York

11 May 2005

US federal prosecutors are reportedly investigating whether ex-AIG chief 'Hank' Greenberg was involved in attempts to manipulate the stock price of the group in the weeks before he quit following probes launched by Eliot Spitzer into accounting transactions between AIG and related offshore companies.

The New York Times claims that recordings exist in which Greenberg can be heard telling a trader to buy shares of AIG. Such purchases may violate federal securities law. The recordings were reviewed by the company and its lawyers, and are said to have been turned over to prosecutors with the US attorney's office in Manhattan and the Securities and Exchange Commission.

AIG, which has had major interests in Bermuda for 50 years, has been under investigation since last year. Reports have alleged that AIG used Barbados-based Union Excess Reinsurance Co and Bermuda-based Richmond Insurance Co. Ltd to park reinsured risks off its balance sheet inappropriately. In addition, the SEC, the New York attorney general's office, the New York Insurance Department and the Justice Department have been examining Greenberg's role in initiating a transaction with General Re, a reinsurance subsidiary of Berkshire Hathaway Inc., that allowed AIG to bolster reserves artificially against future claims - an important measure of an insurer's strength.

AIG said in late March that it did not account correctly for that transaction and others, with a total value of $3bn.

Greenberg, who was 80 last week, resigned as chief executive of AIG on March 14 and as chairman later that month. Greenberg has not been accused of wrongdoing by regulators, but when sub-poenaed to give evidence by New York Attorney General, Eliot Spitzer, on 15th April, he took the 5th amendment in response to some questions.

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