LevonP
10-15-2008, 12:55 PM
This article was picked up from here:
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/15/AR2008101501922.html
New York Attorney General Andrew Cuomo today launched a probe and threatened legal action if insurance giant American International Group did not immediately cease spending money on extravagant bonuses and trips while the company is being bailed out by federal taxpayers.
Cuomo wrote a letter to AIG's board, saying that the company made extraordinary expenditures on lavish resorts and eight-figure bonuses for executives as AIG "slipped towards insolvency" in the past 12 months and that continuing such expenses would be "even more irresponsible and damaging."
He also demanded that the board quickly provide his office with an accounting of past executive compensation packages, junkets and perks at the company. He also urged that the board move to recover some of the excessive payments to former corporate executives and impose controls so it would review such proposed expenses in the future.
AIG spokesman Peter Tulupman said this afternoon that the board was being notified of the attorney general's concerns.
"On October 10, we issued a directive ending all activities that are not absolutely essential to the conduct of our business," Tulupman said in an e-mailed statement. "AIG's priority is to continue focusing on actions necessary to repay the Federal Reserve loan and emerge as a vital, ongoing business."
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The Federal Reserve rescued AIG from bankruptcy last month, first by offering the insurance and financial services corporation an $85 billion loan to help it pay off its failed bets on insuring risky mortgage-backed investments, and then last week by providing another $39 billion in emergency cash financing.
"Over the past several months, this Office has become aware of unwarranted and outrageous expenditures by American International Group, Inc. ('AIG') even as the company slipped towards insolvency," Cuomo wrote. "We demand that the Board of Directors (the 'Board') cease and desist any such further expenditures, and review, rescind, and recover all past unreasonable expenditures."
Cuomo cited the AIG board's decision in March to award then-chief executive Martin Sullivan with a cash bonus of more than $5 million and a "golden parachute" departure package worth $15 million. His letter also noted that the board agreed in February to let a top-ranking executive of AIG's financial products division, which was largely responsible for the risky credit default swaps that swamped AIG, keep $34 million in bonuses and be paid $1 million a month as a consultant after he departed the company this spring.
The attorney general said he considered that the expenditures and payments would be in violation the New York debtor and creditor law.
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/15/AR2008101501922.html
New York Attorney General Andrew Cuomo today launched a probe and threatened legal action if insurance giant American International Group did not immediately cease spending money on extravagant bonuses and trips while the company is being bailed out by federal taxpayers.
Cuomo wrote a letter to AIG's board, saying that the company made extraordinary expenditures on lavish resorts and eight-figure bonuses for executives as AIG "slipped towards insolvency" in the past 12 months and that continuing such expenses would be "even more irresponsible and damaging."
He also demanded that the board quickly provide his office with an accounting of past executive compensation packages, junkets and perks at the company. He also urged that the board move to recover some of the excessive payments to former corporate executives and impose controls so it would review such proposed expenses in the future.
AIG spokesman Peter Tulupman said this afternoon that the board was being notified of the attorney general's concerns.
"On October 10, we issued a directive ending all activities that are not absolutely essential to the conduct of our business," Tulupman said in an e-mailed statement. "AIG's priority is to continue focusing on actions necessary to repay the Federal Reserve loan and emerge as a vital, ongoing business."
ad_icon
The Federal Reserve rescued AIG from bankruptcy last month, first by offering the insurance and financial services corporation an $85 billion loan to help it pay off its failed bets on insuring risky mortgage-backed investments, and then last week by providing another $39 billion in emergency cash financing.
"Over the past several months, this Office has become aware of unwarranted and outrageous expenditures by American International Group, Inc. ('AIG') even as the company slipped towards insolvency," Cuomo wrote. "We demand that the Board of Directors (the 'Board') cease and desist any such further expenditures, and review, rescind, and recover all past unreasonable expenditures."
Cuomo cited the AIG board's decision in March to award then-chief executive Martin Sullivan with a cash bonus of more than $5 million and a "golden parachute" departure package worth $15 million. His letter also noted that the board agreed in February to let a top-ranking executive of AIG's financial products division, which was largely responsible for the risky credit default swaps that swamped AIG, keep $34 million in bonuses and be paid $1 million a month as a consultant after he departed the company this spring.
The attorney general said he considered that the expenditures and payments would be in violation the New York debtor and creditor law.