This Corporate Counsel article reports on the cottage industry in placement services that New York AG (“Aspiring Governor”) Eliot Spitzer has developed in regard to his multiple investigations of big insurance companies. Seems as though a number of those companies (listening AIG and Berkshire?) are hiring former prosecutors as executives in connection with the companies’ efforts to soften the blow of such investigations.
Although not mentioned much in the MSM, the most notorious example to date was Marsh & McLennan’s decision to promote a Spitzer friend and former supervisor in Spitzer’s AG office — Michael Cherkasky — to CEO after Spitzer indicted there would not be a settlement so long as Jeffrey Greenberg (son of current Spitzer target, Maurice “Hank” Greenberg) remained in control. Then, in January, Marsh hired E. Scott Gilbert — a former Assistant U.S. Attorney in Manhattan — to serve as chief compliance officer. Finally, this past December, former prosecutors also took on compliance roles at two other insurers that are under investigation — The Hartford hired Ronald Apter as its new deputy associate counsel for compliance and AIG named associate general counsel Mari Maloney as its chief compliance officer.
Business executives cannot view this trend of hiring former prosecutors as compliance officers with warm and fuzzy feelings. As companies adopt a strategy of appeasing regulators regardless of the nature of their probes, the companies are increasingly cooperating with the investigators, requiring executives to waive their self-incrimination privilege as a condition of maintaining their employment, and cutting a settlement check as quickly as possible to satiate the regulators. Accordingly, prosecutors with ties to Mr. Spitzer should keep their resumes current — you just never know when the next business subject of the Lord of Regulation is going to need some “assistance” in regard to a governmental investigation.