The former AIG chief Hank Greenberg has accused New York authorities of spurring the insurer’s 2008 near collapse by forcing him out the company.
Speaking on Monday after he reached a settlement with the state’s attorney-general over fraud allegations at AIG, the 91-year-old argued his departure in 2005 precipitated the group’s $185bn bailout.
Mr Greenberg stood aside from AIG, at the time the world’s biggest insurer, in 2005 during a probe into its accounting practices by Eliot Spitzer, the state’s then attorney-general. He was replaced as chief executive by the British-born Martin Sullivan.
AIG went on to become one of the biggest casualties of the financial crisis when it was brought to its knees by financial products such as credit default swaps that turned toxic.
Losses at the insurer’s derivatives business precipitated its near collapse. The division was formed during Mr Greenberg’s tenure, but he argued on Monday that the company’s breakdown happened because his successors “did not pay much attention” to the enormous financial exposure.
“Had we remained in the company, I doubt that AIG would have gotten into the problems it had got into later on,” he said. “It led to the virtual destruction of a great company.”
Asked if he was saying that he alone could have prevented AIG’s crisis, Mr Greenberg replied: “I don’t know about alone, but my team and me would have been on top of that. That wouldn’t have happened.”
A spokesman for London-based Ed Broking, which Mr Sullivan now chairs, did not have an immediate comment.
Mr Greenberg’s comments came as he ended an epic 12-year-long battle with New York state, agreeing to pay $9m to resolve allegations that he engineered reinsurance deals that made the company’s financial position look better than it was.
But a fight continued over what he had conceded. The New York attorney-general’s office said Mr Greenberg admitted to “initiating, participating, and approving two fraudulent transactions” committed by AIG while he was chief executive in the early 2000s.
But Mr Greenberg insisted he had made no such admission and accused the attorney-general’s office of misleading the public. His lawyer, David Boies, claimed that the $9m payment was a “nuisance” sum.
Mr Greenberg added that he had been forced out of AIG because Mr Spitzer had threatened the company with criminal prosecution if he did not leave. At the time of his ousting he had been at the helm of AIG for more than four decades — and was just the second head of the company, which was founded in 1919.
Ernest Patrikis, a former AIG general counsel who is now a partner at White & Case, gave some backing on Monday to Mr Greenberg’s version of events.
He said: “Hank was pushed out of the company. That had a real impact. It took a long time for the company to pull itself together after that.
“Martin Sullivan hadn’t had the time to become fully familiar with the broader operations of AIG. He didn’t have enough time to get exposure to the broad operations of the company. He was thrown into it. He did as good as he could.”
The New York attorney-general’s office said on Monday: “Mr Greenberg’s admission speaks for itself: Mr Greenberg initiated, participated in, and approved two transactions that fundamentally misrepresented AIG’s financial performance to shareholders.
“No number of press conferences or TV interviews by Mr Greenberg or Mr Boies is going to change that fact.”
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