Thursday, August 6, 2009
SEC: Ex-AIG CEO Greenberg settles fraud charges
By STEPHEN BERNARD, AP Business Writer Stephen Bernard, Ap Business Writer
August 6, 2009
NEW YORK – The Securities and Exchange Commission said Thursday that former American International Group Inc. CEO Maurice "Hank" Greenberg agreed to pay a $15 million fine to settle fraud charges.
The charges are tied to an accounting scandal earlier this decade at AIG that led to Greenberg's ouster in 2005. The following year, AIG paid more than $1.6 billion to settle charges of improper accounting.
The case is unrelated to the government bailout of AIG, which is in the process of trying to sell off assets to pay off the $182.5 billion in loans it has received since last September.
A spokesman for Greenberg was not immediately available to comment. An AIG spokesman declined to comment.
The SEC said AIG's former chief financial officer, Howard Smith, will pay a $1.5 million fine tied to the investigation.
In complaints against Greenberg and Smith, the SEC said the pair were responsible for making misstatements that falsely showed AIG met or exceeded earnings and growth targets between 2000 and 2005. The pair did not admit or deny any wrongdoing as part of the settlement.
Greenberg was forced out of AIG after charges that the company had engaged in deceptive accounting practices surfaced.
Greenberg, who built AIG over his 35-year career from a small company into the world's largest insurer, have been fighting in court in an unrelated case over who controls an employee retirement fund. AIG had accused Greenberg of plundering the AIG retirement program composed of $4.3 billion in stock through a company called Starr International Co. that Greenberg controls. A jury last month sided with Greenberg in the civil case saying he did not have to reimburse AIG for the stock, but the decision was only an advisory recommendation.
The judge hearing the case will make a final ruling on who controls the fund, and its purpose, by the end of the month. This case is also unrelated to the insurer's bailout by the government.
AIG is currently in the middle of a major overhaul as it looks to repay the government for the loans it received to avoid collapsing last fall at the peak of the credit crisis. In return for the loan package, which is worth up to $182.5 billion, the government received about an 80 percent stake in the insurance giant.