With the criminal investigation of American Insurance Group, Inc. and Berkshire Hathaway unit General Re heating up earlier this week, former AIG chairman and CEO Maurice “Hank” Greenberg made his first detailed public comments regarding the propaganda campaign that New York AG Eliot Spitzer has orchestrated against him.
Mr. Greenberg told a group of current and former AIG executives that at least one of the accounting “errors” that AIG has acknowledged subsequent to his leaving the company — the failure of AIG to expense executive compensation provided by a Greenberg-controlled company — had been thoroughly reviewed and approved by AIG’s lawyers and accountants before AIG ever approved the arrangement.

Mr. Greenberg’s remarks came at the annual shareholders’ meeting of C.V. Starr & Co., the closely-held company that 80 AIG executives own and which Mr. Greenberg used while at AIG to supplement the salaries of key AIG executives. About 50 of C.V. Starr’s shareholders — including some current AIG exectives — attended the meeting. Mr. Greenberg and the three Starr organizations he heads control a large chunck of AIG stock, about 17.5% as of March 31, 2005. Starr International has previously provided a deferred-compensation program for AIG executives, while C.V. Starr has served as a conduit for selling AIG insurance to businesses.
In his comments — which reportedly drew applause at least once — Mr. Greenberg promised at least one “white paper” that will rebut AIG’s restatement of five years worth of earnings and the allegations of accounting improprieties that Mr. Spitzer has made in a civil-fraud lawsuit against Mr. Greenberg and AIG. Mr. Greenberg stated that the white paper would be sent to regulators and then made available to the public.
Mr. Greenberg also advised his audience that AIG’s previous accounting for the compensation that Starr International provided to AIG executives had been reviewed and approved by AIG’s legal and accounting advisers. Moreover, when AIG board members raised questions about using Starr International as a compensation vehicle, Mr. Greenberg stated that he offered to put the issue to a vote of AIG shareholders, but that the AIG board declined to do so. Finally, Mr. Greenberg stated that a 2003 letter from an outside law firm advised AIG that its disclosure of the Starr International compensation plan in regulatory filings was appropriate.
Regarding Mr. Greenberg’s comments, a spokesman for Mr. Spitzer stated that “we stand by the lawsuit we filed.”