The New York-based insurance giant had accused Mr Greenberg (left), through a company called Starr International Co. that he controls, of plundering an AIG retirement program composed of US$4.3 billion instock. -- PHOTO: REUTERS
NEW YORK - AMERICAN International Group Inc (AIG) lost a big round on Tuesday in its court battle against former CEO Maurice 'Hank' Greenberg.
Right to sell shares
AIG charged that Mr Greenberg had improperly taken the stock and then sold it out of anger over his ouster from the company in 2005 amid investigations of accounting irregularities. Mr Greenberg's lawyers contended that he had the right to sell the shares because they were owned by Starr International.
AIG was on the verge of collapse after having lost billions of dollars because of risky investments, including mortgage-backed securities, made during the housing boom. Its insurance operations have been sound. Now, a number of its assets are up for sale as the company tries to gather cash to pay back the government.
In an advisory decision, a federal jury in Manhattan found that a private investment firm controlled by Mr Greenberg did not have to reimburse AIG for US$4.3 billion (S$6.29 billion) in shares taken from a company retirement bonus fund in 2005, shortly after Mr Greenberg was ousted as the insurer's CEO.
US District Judge Jed S. Rakoff said he would issue a ruling in the case by the end of August.
The jury deliberated for about half a day before issuing its decision.
The New York-based insurance giant had accused Mr Greenberg, through a company called Starr International Company that he controls, of plundering an AIG retirement program composed of US$4.3 billion in stock. The questions raised during the civil trial boiled down to who controlled the fund, and what its purpose was.
AIG has received US$182.5 billion in federal aid since last fall, and the government has taken an 80 per cent stake in the company. The company said it would use any proceeds from the trial to repay some of its loans from the government. The case was unrelated to the company's recent financial crisis.
The insurer's attorney, Theodore Wells, said only that he was 'disappointed in the verdict.' He had asked the jury to recommend that AIG receive US$4.276 billion and US$185 million AIG shares from Starr International.
Mr Greenberg, 84, who testified during the first week of the trial that began on June 15, was not present for the jury's decision.
Mr David Boies, Starr International's attorney, said: 'I think the quickness of the decision reflects the simplicity of the case. I would be hopeful that the judge would see it the same way the jury does.'
Ms Liz Bowyer, spokesman for Starr International, said the companywas 'gratified by the jury's quick and complete vindication of Starr International and Mr Greenberg.' -- AP
