event that might otherwise have made headlines has been somewhat
sidelined: A $115 million settlement between American International
Group (AIG) and the insurer’s former chairman and CEO Maurice
“Hank” Greenberg and three other former AIG executives.
The news came in a statement released by shareholder and
corporate governance law firm Grant & Eisenhofer (G&E)
which reached the settlement on behalf of AIG after six years of
litigation with trial scheduled to start on 15 September 2008.
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According to G&E the four former AIG executives were accused
of “conducting an extended series of transactions expressly
engineered to siphon money away from the company and into private
affiliates they controlled.”
G&E continued: “The action was brought in 2002 by Teachers’
Retirement System of Louisiana which alleged that Greenberg and
other AIG executives and directors breached their fiduciary duties
by directing insurance business worth hundreds of millions of
dollars in commissions to CV Starr, despite the fact that AIG could
easily have generated the business for itself – and in fact, had
been doing so.”
CV Star, which is controlled by Greenberg, describes itself as a
privately-held global investment holding company with insurance
agencies and a portfolio of global investments.
Of the total settlement, G&E noted that $29.5 million would be
in the form of a contribution from Greenberg, AIG’s former CFO
Howard Smith, AIG’s former vice-chairman of investments Edward
Matthews and AIG’s former vice-chairman of insurance Thomas Tizzio.
The remaining $85.5 million will be covered by director’s &
officer’s liability insurance.
