AIG is at war with ex-chief
AIG began a legal fight with former boss Maurice Greenberg in a New York federal court yesterday, in a bitter fight over disputed assets worth $4.3bn (£2.6bn).
Greenberg, chairman of privately-held Starr International, is accused by AIG of snatching the assets unlawfully in 2005. He is due to take the stand to testify this week.
Fighting the corner of recession-battered AIG is legal veteran Theodore Wells of New York firm Paul, Weiss, Rifkind, Wharton & Garrison, which recently won a $364m case for Citigroup against Italian food group Parmalat.
Working for Starr is David Boies, chairman of Boies, Schiller & Flexner. He is known for winning $2.25bn from Visa and $1.8bn from MasterCard for American Express in some of the biggest civil antitrust cases ever fought.
The battle has become politicised, with AIG now saying it would use the proceeds to repay some of its $17bn taxpayer bailout, after previously suggesting any gains would be used for staff payouts. Meanwhile, Starr has given $1.5bn to good causes in the last week, to help cement its charitable credentials.
Greenberg ran Starr – which was given 300m shares in AIG when it was formed in 1970 – alongside AIG during his 37-year tenure as chief executive.
When he was ousted from AIG in 2005 amid an accounting scandal, he retained control of Starr and sold off most of the shares, raising $4.3bn shortly before the market collapsed and rendered AIG’s stock practically worthless.
AIG contends the shares were owed to it, as they were part of a trust it established to pay bonuses to top staff. Starr says no such trust existed. The case continues.
1919
1949
1962
Starr names Hank Greenberg boss of the group’s underperforming US holdings. Greenberg shifts the focus to higher-margin
1968
Starr names Greenberg as his successor a year before his death. AIG is listed on the stock exchange a year after that.
1970
Starr International is created and given 300m AIG shares.
2005
AIG faces fraud investigations amid an accounting scandal. Greenberg resigns and is replaced by Martin Sullivan, but he retains control of Starr International and starts selling its AIG shares.
Greenberg begins a legal attack on AIG, claiming it is holding a $15m art collection and other property belonging to Starr International.
2008
AIG finds itself in a liquidity crisis that brings it near to collapse, after investing in toxic assets. Edward Liddy becomes chief exec.
2009
AIG and Starr International enter a legal battle over the $4.3m Starr made from selling AIG shares the insurer says it was owed.