As predicted in this earlier post, this NY Times article reports on the guilty plea of Richard Napier — a senior vice president at General Re in 2000 and 2001 when the questionable transaction with American International Group occurred — to a single criminal conspiracy count in United States District Court in Alexandria, Va. on this past Friday. Here are the previous posts on the investigation into AIG and Berkshire Hathaway, Inc.’s General Re.
Meanwhile, General Re continued its attempt to hedge the risk of loss resulting from the criminal probes by negotiating with the government about settling a continuing criminal investigation that focuses on whether General Re conspired with AIG to distort its finances and mislead investors. The negotiations are complicated by the competing government investigations into AIG and General Re, which a Justice Department probe, an SEC investigation, and the New York attorney general office’s investigation.
A deal between General Re and the government would be based upon the Justice Department’s 2003 Thompson Memo, which contains guidelines that federal prosecutors are supposed use to charge companies in criminal cases. For example, prosecutors can offer lighter charges against companies that “identify culprits” within their organizations, make witnesses available to prosecutors, disclose results of their own internal investigations and waive attorney-client protection.
Berkshire’s Warren Buffet has been pushing General Re’s cooperation with authorities as a basis for leniency. Berkshire’s lawyers have instructed General Re executives to provide emails, notes and other documents to investigators in connection with the various investigations, and Berkshire has publicly stated several times that it is cooperating fully with all government investigations of its reinsurance businesses. AIG’s Board has adopted a similar approach with regard to the investigations.