Business NEWS
Maurice Raymond “Hank” Greenberg Vs. American International Group
By Amarendra Bhushan for CEOWORLD Magazine Updated:July 7, 2009
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Maurice “Hank” Greenberg, former chief executive of American International Group Inc, fabricated documents and lied under oath in a bid to rewrite history and cloud who is the rightful beneficiary of a large and valuable block of AIG stock, AIG lawyer Ted Wells told a federal jury.
Ted Wells said, Greenberg’s assertions at trial that the beneficiary of the stock was always intended to be a charitable trust was no more than an attempt to cover up a pledge made 35 years earlier.
AIG contends Starr International, a private company that was once closely affiliated with the insurer, established a trust to fund a retirement plan in the 1970s. But in 2005, Greenberg and other Starr International voting shareholders threw out the compensation plan within days of Greenberg’s ouster from the insurer.
AIG is suing Starr to reclaim $4.3 billion of proceeds from stock sales and to wrest back 185 million other shares with the intention of bringing funding for the retirement plan in-house, reuters reported.
News reports from Reuters and Bloomberg indicate that Ted Wells of Paul, Weiss, Rifkind, Wharton & Garrison, who represents AIG, and David Boies of Boies, Schiller & Flexner, who represents Starr, stuck largely to the same messages they gave in their openings. At stake in the case is $4.3 billion and nearly 186 million AIG shares. AIG claims that after Greenberg was ousted as CEO of the company in 2005, SICO began to sell off AIG shares that were supposed to be held in trust for AIG and its employees as it had done in previous decades. Starr, meanwhile, argues that no trust ever existed and that it always had the right to discontinue the compensation plan for AIG employees.
But David Boies, the lead lawyer for Mr. Greenberg, said Monday that Mr. Greenberg had acted entirely within his rights when he removed the stock, in his capacity as chairman of a second company, Starr International. Mr. Boies said the A.I.G. retirement plan could be lawfully disbanded under certain circumstances, and that a “trust,” as Mr. Wells depicted it, did not exist.
Mr. Boies showed the jurors numerous legal documents to support his arguments, including a letter written by A.I.G.’s general counsel in 2001, saying the shares in question “are not held in trust.” The letter went on to say that the shares were subject to creditors’ claims, like other corporate assets.
In 1962, Greenberg was named by AIG’s founder, Cornelius Vander Starr, as the head of AIG’s failing North American holdings. In 1968, Starr picked Greenberg as his successor. Greenberg held the position until 2005, when he stepped down amid a major accounting scandal and was replaced by Martin J. Sullivan.
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