 "Ex-AIG chief settles accounting fraud case")
Maurice “Hank” Greenberg, the former American International Group chief executive, has reached a settlement that ends his 12-year battle with the New York attorney general’s office, which accused him of orchestrating sham transactions at the insurer.
“After over a decade of delays, deflections and denials by Greenberg, we are pleased that Greenberg has finally admitted to his role in these fraudulent transactions,” New York Attorney General Eric Schneiderman said in a statement.
Greenberg, 91, will pay about $9 million and former AIG Chief Financial Officer Howard Smith will pay about $900,000 to settle charges first brought in 2005 by then-New York Attorney General Eliot Spitzer.
The former executives were accused of overseeing a $500 million transaction with General Re, a unit of Warren Buffett’s Berkshire Hathaway, that boosted AIG loss reserves.
They were also faulted for a transaction with Capco Reinsurance that converted a $210 million underwriting loss from an automotive warranty programme into an investment loss.
“I knew these facts at the time I initiated, participated in and approved these two transactions,” Greenberg said in a statement. Smith also admitted he knew the facts when he participated in and approved the transactions.
David Boies, a lawyer for Greenberg, in a statement said the attorney general had no evidence that Greenberg was aware at the time he approved the transactions that there was anything improper, “let alone that Greenberg was aware of any fraud.” Greenberg’s and Smith’s payments reflect some performance bonuses they received from 2001 to 2004, Schneiderman said.
“After over a decade of delays, deflections and denials by Greenberg, we are pleased that Greenberg has finally admitted to his role in these fraudulent transactions,” New York Attorney General Eric Schneiderman said in a statement.
Greenberg, 91, will pay about $9 million and former AIG Chief Financial Officer Howard Smith will pay about $900,000 to settle charges first brought in 2005 by then-New York Attorney General Eliot Spitzer.
The former executives were accused of overseeing a $500 million transaction with General Re, a unit of Warren Buffett’s Berkshire Hathaway, that boosted AIG loss reserves.
They were also faulted for a transaction with Capco Reinsurance that converted a $210 million underwriting loss from an automotive warranty programme into an investment loss.
“I knew these facts at the time I initiated, participated in and approved these two transactions,” Greenberg said in a statement. Smith also admitted he knew the facts when he participated in and approved the transactions.
David Boies, a lawyer for Greenberg, in a statement said the attorney general had no evidence that Greenberg was aware at the time he approved the transactions that there was anything improper, “let alone that Greenberg was aware of any fraud.” Greenberg’s and Smith’s payments reflect some performance bonuses they received from 2001 to 2004, Schneiderman said.
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