Greenberg on defence over fund
Looking small and frail in the witness box of a New York court, 84-year-old insurance legend Maurice (Hank) Greenberg last week fronted up against lawyers for AIG, the company he built up over 38 years as its CEO.
At stake is his slightly tattered reputation and $US4.3 billion ($5.4 billion) that he allegedly raided from a company retirement fund.
AIG filed a civil lawsuit against Mr Greenberg and his company, Starr International, in March last year. It alleges he seized $US4.3 billion in stock in retribution at his forced resignation in 2005.
Mr Greenberg was forced out of AIG in March 2005 after a probe by New York Attorney-General Eliot Spitzer over a series of financial reinsurance deals that allegedly disguised the company’s true financial state.
AIG lawyers claim Mr Greenberg misused former AIG subsidiary Starr International, which was set up as an investment vehicle for senior AIG executives and eventually became the group’s largest shareholder, controlling 9.7% of the company’s stock. He and six other former executives took over the unit following his departure.
The lawyers allege Mr Greenberg had a fiduciary duty to use the AIG stock acquired by Starr International to fund a deferred employee compensation plan established around 1970.
Instead Starr retained the shares, selling a large proportion. The case is complicated by the fact there is little written evidence of the alleged executive compensation plan.
Last week AIG counsel presented a jury with video evidence featuring Mr Greenberg that is said to clearly display his knowledge of the compensation plan. Counsel for Mr Greenberg countered by claiming AIG did not own the shares sold by Mr Greenberg.
Mr Greenberg claims the companies mutually agreed to suspend the compensation plan in 2005, instead appointing a charitable trust as beneficiary.
US District Judge Jed Rakoff has barred the discussion of “irrelevant” matters to the case, including the circumstances surrounding Mr Greenberg’s departure, the US Government bailout of AIG and the controversial bonuses paid to AIG executives last year.
The trial is expected to take a month.
At stake is his slightly tattered reputation and $US4.3 billion ($5.4 billion) that he allegedly raided from a company retirement fund.
AIG filed a civil lawsuit against Mr Greenberg and his company, Starr International, in March last year. It alleges he seized $US4.3 billion in stock in retribution at his forced resignation in 2005.
Mr Greenberg was forced out of AIG in March 2005 after a probe by New York Attorney-General Eliot Spitzer over a series of financial reinsurance deals that allegedly disguised the company’s true financial state.
AIG lawyers claim Mr Greenberg misused former AIG subsidiary Starr International, which was set up as an investment vehicle for senior AIG executives and eventually became the group’s largest shareholder, controlling 9.7% of the company’s stock. He and six other former executives took over the unit following his departure.
The lawyers allege Mr Greenberg had a fiduciary duty to use the AIG stock acquired by Starr International to fund a deferred employee compensation plan established around 1970.
Instead Starr retained the shares, selling a large proportion. The case is complicated by the fact there is little written evidence of the alleged executive compensation plan.
Last week AIG counsel presented a jury with video evidence featuring Mr Greenberg that is said to clearly display his knowledge of the compensation plan. Counsel for Mr Greenberg countered by claiming AIG did not own the shares sold by Mr Greenberg.
Mr Greenberg claims the companies mutually agreed to suspend the compensation plan in 2005, instead appointing a charitable trust as beneficiary.
US District Judge Jed Rakoff has barred the discussion of “irrelevant” matters to the case, including the circumstances surrounding Mr Greenberg’s departure, the US Government bailout of AIG and the controversial bonuses paid to AIG executives last year.
The trial is expected to take a month.