Source: Internet
American International Group agreed Thursday to help the New York State attorney general’s office recover tens of millions of dollars in improper expenditures, including compensation given to two former top executives.
A.I.G. also agreed to cancel a $10 million severance package for its former chief financial officer, Steven J. Bensinger. He was replaced on Thursday by the giant insurance company’s comptroller, David L. Herzog.
The agreement came a day after Attorney General Andrew M. Cuomo assailed A.I.G. for making “unwarranted and outrageous expenditures” that he said violated New York law and that he called particularly “irresponsible and damaging” in light of the federal government’s $123 billion rescue of the company.
Mr. Cuomo criticized in particular the multimillion-dollar payments to Martin Sullivan, A.I.G.’s former chief executive, and Joseph J. Cassano, who ran the unit blamed for the losses that pushed the company to the brink of collapse. A.I.G. agreed Thursday to help recover that money.
Mr. Cuomo met Thursday with A.I.G.’s new chief executive, Edward M. Liddy, and the agreement was announced jointly by them.
Under the terms of the agreement, A.I.G. will provide the attorney general’s office with an accounting of all compensation paid to its senior executives. A.I.G. also agreed agreed to cancel all junkets and benefits that are not justified by legitimate business needs. AIG will immediately cancel more than 160 conferences and events, some exceeding more than $750,000 per event, for a total savings of more than $8 million.
Still, ABC News reported Thursday evening that A.I.G. was still paying hundreds of thousands of dollars for a luxury suite at Madison Square Garden, the home of the New York Knicks and Rangers. An A.I.G. spokesman told ABCNews.com that the contract for the suite was signed in February and that it had been used by its brokers and clients, although that is expected to stop.
Mr. Cuomo, in a letter to A.I.G.’s board on Wednesday, assailed the company for allowing executives to take golf and hunting trips after the government extended an initial $85 billion line of credit to the company. A handful of A.I.G. officials flew to England on a private jet for a partridge hunt that reportedly cost about $90,000. The use of the plane cost about $17,000, according to a person familiar with Mr. Cuomo’s investigation.
On Thursday, the company also agreed to establish tighter management controls on future expenses to prevent any future unwarranted spending on salaries, bonuses, stock options, severance payments, gratuities, benefits, junkets and perks.
Mr. Cuomo noted in his letter that Mr. Sullivan and Mr. Cassano were paid millions of dollars even as A.I.G.’s losses were mounting.
“The board awarded its chief executive officer a cash bonus of over $5 million and a golden parachute worth $15 million,” Mr. Cuomo wrote. “Similarly, in February 2008, a top-ranking executive who was largely responsible for A.I.G.’s collapse was terminated, but still permitted by the board to keep $34 million in bonuses. This same individual apparently continued to receive $1 million a month from the company until recently.”
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