A.I.G. to Help Cuomo Recover Millions in Executive Pay

[Snazzy]

Source: NYT

A.I.G. to Help Cuomo Recover Millions in Executive Pay
October 16, 2008, 4:47 pm

Updated at 5:25 p.m.

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.

....


Read more: http://dealbook.blogs.nytimes.com/2008/10/16/aig-to-help-cuomo-recover-millions-in-executive-pay/index.html?hp

---

Previously:

Cuomo Assails A.I.G. for ‘Outrageous Expenditures’
October 15, 2008, 3:32 pm

Updated at 4:10 p.m.

New York Attorney General Andrew M. Cuomo demanded Wednesday that American International Group stop all “unwarranted and outrageous expenditures” and that the troubled insurance giant seek to recover any money that it spent unreasonably in the past.

He said this spending violated New York State law and he threatened to take legal action against the company if needed. A.I.G., in turn, said it would “fully cooperate” with the attorney general’s office.

Mr. Cuomo, in a letter to A.I.G.’s board, called the company’s expenditures particularly “irresponsible and damaging” in light of the $123 billion in loans that were made by the federal government to rescue the company. (Read the letter after the jump.)

The attorney general strongly criticized the company’s spending on executive compensation. “In the last several months, as A.I.G. was teetering toward bankruptcy, and operating with unreasonably small capital, A.I.G. nevertheless made numerous extraordinary expenditures in the form of executive compensation payments, junkets and perks for its executives,” Mr. Cuomo said.

He cited in particular a $5 million cash bonus and a $15 million “golden parachute” that were given in March to A.I.G.’s chief executive at the time, Martin J. Sullivan.

...

http://dealbook.blogs.nytimes.com/2008/10/15/cuomo-assails-aig-for-outrageous-expenditures/

[harmonicon]

1. this is why these sorts of things should be nationalized, not "bailed out"

Make top executive pay the same as that of a senator, along with the same health plan and pension. That would go for all employees. You'll have people scrambling for these jobs, and they will do a good job, because they won't be in it for instance huge profits.

[Jackpine Radical]

4. Beyond that, we need to change the whole corporate ethic

so that values and purposes other than making money for the owners are also recognized. The corporate "person" is mandated by law to behave as a psychopath--totally conscienceless, narrowly self-interested, with no concern for the larger society, or even for its own employees.

[harmonicon]

5. yep

Unfortunately, I think taxes are the only realistic way to fix it. Make taxes on insane profits so high that there isn't the drive to squeeze out every last dollar. If there was little to be gained between a corporation making 34 billion over making 5 billion (because tax over a certain amount would be 90 some percent), maybe they would actually focus on doing what is right by their workers and the world at large. I know this is still wishful thinking, but radically altering tax codes seems more likely than changing corporate person-hood with the supreme court.

It was really disturbing to me watching McCain last night deride the idea of "spreading the wealth around", and gets right to the heart of why I, and most people, will never vote republican. We think that spreading the wealth around is simply the right thing to do: a no-brainer.

[Jackpine Radical]

7. I think it would be useful to explore other possible structures such as interlinked

producer & consumer co-ops & collectives, basically replacing the "social-darwinist" competitive capitalist model with one of cooperation, mutual assistance, etc.

[harmonicon]

8. that's certainly possible, and starting to happen in some ways

However, it seems to me that in the modern world where people are constantly traveling and moving, that things like that are harder to get going, or to grow to include people in more than one community.

In the field where I work (experimental music), what you suggest is certainly the case. I remember one discussion with a guy who was arguing for making music that appeals to a wide audience, but I argued that it was better to have a small supportive audience - the sort of people that will give you a place to stay in a foreign country and help with production, instead of just perpetuating a producer/consumer relationship. I know that this is a very simple thing, but as it turns out, I do live and work in a very supportive, but small, world-wide community. I can see that same spirit moving into other fields, but not big industry.

One problem is getting people involved even on the local level, and I don't really know where to start with that. As is, many more people could support share-based or co-op farming, for instance, but don't. The problem seems to be that an entire culture has been built around getting as much (quantity) possible for as little money/work as possible, and I don't know how to change that. When I was staying with my girlfriend's parents this summer, I couldn't believe that they shop at WalMart. These are fairly wealthy (by my standards) people, and they don't support local or union businesses even though they can afford to. How do we convince people like them to do what you're suggesting? I'm afraid that when people won't make these steps on their own, a system should be established where doing so would effect their bottom-line - make the choice for them.

[Jackpine Radical]

10. This is a dialogue worth continuing.

Not tonight, though. PM me & I'll send you my email. I'll extend that offer to anyone else who sees this subthread & has an interest in talking about it.

[FatDave]

14. Screw PMing!

I want to at least read what you guys have to say. Please, post here.

[Snazzy]

13. way back in junk bond era

(and closer to my brief experiments with yuppiedom) I remember being fascinated with Milken's company itself being declared a felon. That accomplished absolutely nothing right?

Of course, some of these guys worked with Milken. It's all the same fucking day for taxpayer ripoffs. They just get bigger and each time this same tribe of fuckwits tell everyone that it's some sort of new paradigm and the old rules don't apply. And yet every time depression era laws they get rescinded or circumvent would had prevented their deceptive practices. And today I read about another accounting change that will temporarily prop up the house cards. Sooner or later the foreign creditors will say when--surprised they haven't. We ain't seen nothing yet.

[psychmommy]

2. i hope it is a trend. i hope this helps ny with their deficit.

[aquart]

3. I want every goddamn dime.

And if Mr. Cuomo wants higher office and has no taste for prostitutes, I'm willing.

[UpInArms]

6. Bush Pioneer: Maurice R. Greenberg

http://www.tpj.org/pioneers/maurice_greenberg.html

Name: Maurice R. Greenberg
Occupation: CEO & Chair, American International Group
Industry: Insurance
Home: New York, New York
1999 Salary & Perks: $27 Million

Political Contributions:Bush Gubernatorial Races: $5,000

Republican Hard Money: $83,000
Republican Soft Money: $0
Democratic Hard Money: $8,000
Democratic Soft Money: $0
Federal PAC Hard Money: $30,000
Total Contributions: $126,000

Soft Money from Employer: $1,278,100
to Republicans: $658,100
to Democrats: $620,000

Like Pioneer Heinz Prechter, President Bush took big-donor insurance magnate Maurice �Hank� Greenberg along with him on his �92 trade mission to Asia. As a result of this �access,� AIG got to sell more insurance in Japan and became the first foreign company allowed to sell insurance in China. Besides being a huge political funder, Greenberg is a major underwriter of the Heritage Foundation think tank (see Pioneer Elaine Chao). Imagine his horror to discover a Heritage thinker urging Congress to postpone its 2000 vote on normalizing trade with Greenberg�s beloved China. After Greenberg threatened to cut off funding, the think tank rethunk its position and issued a new report: �How Trade With China Benefits Americans.� AIG scored a revolving-door coup in �98 when it hired Ernest Patrikis, an official departing the powerful Federal Reserve Bank of New York, as a �special adviser� to Greenberg. An AIG subsidiary, AIG Capital Partners Inc., paid a $500,000 �finder�s fee� to Pioneer Wayne Berman, who helped the company land a contract to manage $100 million in state pension investments from ex-Connecticut Treasurer Paul Silvester. Silvester was convicted in �99 of taking kickbacks from the private money managers to whom he awarded investment contracts. AIG paid Greenberg more than $6 million in �98 alone. Pioneer Robert J. O�Connell also was an AIG executive until recently.

[Snazzy]

12. AIG, Freddie Mac among RNC donors

AIG, Freddie Mac among RNC donors
By Tom Webb
Article Last Updated: 10/16/2008 04:17:02 PM CDT

Insurance giant AIG donated $750,000 to help host the 2008 Republican National Convention, a gathering held only weeks before the firm needed an emergency $85 billion bailout from the Federal Reserve.

Mortgage giant Freddie Mac donated $250,000 to the RNC, according to newly released financial filings. One week after the convention, taxpayers essentially took over the firm, in order to prevent a financial calamity.

A number of U.S. financial institutions that were RNC donors are now receiving capital injections from the U.S. Treasury. Among them: Goldman Sachs (which donated $250,000) and Morgan Stanley (which donated $100,000).

There are also RNC donors among the nine institutions included in this week's Treasury rescue plan: JPMorgan Chase (which donated $100,000), and Wells Fargo (which donated at least $187,000).

The donations, which are being publicly released today, were all made to the Minneapolis-St. Paul 2008 Host Committee, the group responsible for raising money to hold the Republican National Convention. The convention was held in St. Paul on Sept. 2-4, and nominated Sen. John McCain and his running mate, Alaska Gov. Sarah Palin.

....

http://www.twincities.com/allheadlines/ci_10737545

Now that's some hard money. Too big to fail, eh?

[Snazzy]

9. non blog NYT update: A.I.G. Agrees to Let New York Review the Propriety of Its Pay Packages

A.I.G. Agrees to Let New York Review the Propriety of Its Pay Packages
By JONATHAN D. GLATER

A day after New York’s attorney general criticized bonuses and other payments made by the American International Group, the insurance giant agreed to allow its spending habits to be reviewed.

The attorney general, Andrew M. Cuomo, said on Thursday that A.I.G. would also cancel 160 conferences and other events that would have cost more than $8 million and would provide information on compensation, bonuses and other payments to determine whether the payments were proper.

In addition, Mr. Cuomo said A.I.G. had agreed to suspend a $10 million severance payment to its chief financial officer, Stephen J. Bensinger, who is leaving the company.

The announcement came after Mr. Cuomo demanded that A.I.G.’s directors take steps to claw back payments to former executives like Martin J. Sullivan, who stepped down as chief executive in June and received a $15 million severance, and Joseph J. Cassano, who ran the unit blamed for the transactions that caused multibillion-dollar losses. (he has a $million a month no-show job--snazzy)

...

“The signal to corporate America is, it’s a different day,” Mr. Cuomo said, adding that the changes put in place by A.I.G. should serve as a model for other companies. “When you’re receiving taxpayer funds, the rules of the game change,” he said.

....

http://www.nytimes.com/2008/10/17/business/17aig.html?ref=business&pagewanted=print

[Haole Girl]

11. AIG and help should never be in the same sentence. nt

[FatDave]

15. OK America, you see what happened here?

We bailed out AIG with our money. AIG decided they could fuck around with our money. And a Democrat stepped up and smacked them down like the greedy little bastards they are. And AIG is now trembling in fear.

Democrats got your back, America. Believe it.