WASHINGTON - THE US government's chief overseer of bank bailout funds, Neil Barofsky, announced on Thursday a probe into bonuses paid by AIG including what role the Treasury played in approving the payments.

Mr Barofsky, the special inspector-general of the Troubled Asset Relief Programme, told US lawmakers he would 'act aggressively to recover the taxpayer's money' if wrongdoing is found in the bailed-out insurer's bonuses.

Heavy taxes on bonuses WASHINGTON - ANGRY lawmakers prepared to levy heavy taxes on employee bonuses at insurance giant American International Group Inc and at other companies that received big US government bailouts. The House was to vote on Thursday on a bill that would place a 90 per cent federal tax on bonuses paid to employees with family incomes above US$250,000. The targeted tax would hit bonus recipient at companies that have received at least US$5 billion in government money. ... more

'Preliminary information we have seen indicates that the Tarp contract between AIG and Treasury that was entered into back in November specifically contemplated the payment of bonuses and retention payments to AIG employees, including AIG's senior partners,' he said in congressional testimony.

Mr Barofsky said his office 'will be reviewing the process at Treasury with respect to Treasury's decision to authorise and approve such payments, both at the time it entered into the contract with AIG and since that time'. -- AFP