After more than a decade of bitter litigation over fraud claims brought by New York’s top lawyer, former AIG chief executive Maurice “Hank” Greenberg is finally throwing in the towel.
The New York attorney general’s office said on Friday that Mr Greenberg has agreed to pay $9m to settle a 12-year old lawsuit over alleged accounting fraud that took place at the insurer while he was at its helm. Mr Greenberg also admitted that he initiated, participated in and approved two reinsurance transactions that misrepresented AIG’s loss reserves and misstated its underwriting results, according to the AG’s office.
AIG’s former chief financial officer Howard Smith also agreed to settle claims against him. AIG, which was also named as a defendant in the original suit, had paid $1.6bn in 2006 to resolve the case. After more than a decade of legal wrangling, the case against Mr. Greenberg and Mr Smith went to trial in September.
Both men were called to testify and, after doing so, the trial was put on hold so the parties could discuss a potential settlement with Kenneth Feinberg, a preeminent dispute-resolution attorney famous for handling compensation funds for the likes of the Sept. 11, 2001 attacks and the BP Deepwater Horizon oil spill. The settlement was reached as a result of that process, the AG’s office said.
New York attorney general Eric Schneiderman said in a statement:
“Today’s agreement settles the indisputable fact that Mr Greenberg has denied for twelve years: that Mr Greenberg orchestrated two transactions that fundamentally misrepresented AIG’s finances. After over a decade of delays, deflections, and denials by Mr Greenberg, we are pleased that Mr Greenberg has finally admitted to his role in these fraudulent transactions and will personally pay $9 million to the State of New York.”
Mr Greenberg said in a statement:
“I have agreed to settle the case brought against me by the Office of the New York Attorney General…I knew these facts at the time that I initiated, participated in and approved these two transactions.”
Mr Smith’s statement echoed a similar depiction of the transactions.