AIG Bonuses, Retreats Violate State Law, Cuomo Says

[torchbearer]

http://www.bloomberg.com/apps/news?p...qD5ik&refer=us


Oct. 15 (Bloomberg) -- New York Attorney General Andrew Cuomo is investigating ``unwarranted and outrageous expenditures'' at American International Group Inc., which received an $85 billion federal bailout last month.

In a letter to AIG's board of directors, Cuomo demanded the company stop ``extravagant'' expenditures and recover millions of dollars in unreasonable payments, or face legal action.

Cuomo cited a $5 million bonus and a $15 million ``golden parachute'' AIG awarded its chief executive officer in March. Martin Sullivan was AIG's CEO at the time. Cuomo said the company also spent hundreds of thousands of dollars on ``luxurious retreats'' for executives, including an overseas hunting party and a golf outing.

``The party is over,'' Cuomo said today at a press conference on Wall Street in lower Manhattan. ``No more hunting trips. No more luxury resorts. They are not going to have the party and leave the hangover for the taxpayers.''

AIG has been castigated by officials since the New York- based insurer hosted a $440,000 conference at a California resort last month after agreeing to the federal bailout to avoid bankruptcy. In a letter released Oct. 10, House Financial Services Committee Chairman Barney Frank told Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke the executives responsible for the gathering should ``personally reimburse the government,'' and requested increased oversight of the company. Frank asked for a response by the end of this week.

Law Violated

Cuomo claimed in his letter that the expenditures violated the state's debtor-creditor law and demanded an accounting of AIG's executive compensation and benefits since January 2007. He said the government's financial rescue of AIG made the expenditures ``even more irresponsible and damaging.''

The U.S. government offered AIG an $85 billion loan last month as the company slipped toward insolvency. The company may access an additional $37.8 billion from the Federal Reserve Bank of New York to replenish liquidity.

Cuomo's letter ``will be brought to the immediate attention''' of AIG directors, said Nicholas Ashooh, a spokesman for the insurer.

``The events referred to should have been canceled, it's regrettable they weren't, but we've issued a policy canceling all such events and reviewing all expenses going forward,'' Ashooh said in a phone interview. He declined to comment on Sullivan's compensation.

AIG fell 37 cents, or 13 percent, to $2.43 today in New York Stock Exchange composite trading. The shares have slumped 96 percent this year.

`Fully Cooperate'

AIG issued a statement today saying the company would ``fully cooperate'' with Cuomo's office ``AIG's priority is to continue focusing on actions necessary to repay the Federal Reserve loan and emerge as a vital, ongoing business,'' according to the statement.

Cuomo also noted in his letter that an unnamed top-ranking executive, ``who was largely responsible for AIG's collapse'' and was fired in February, was allowed to keep $34 million in bonuses. Cuomo said the executive also apparently continued to receive a $1 million a month from the company until recently.

Joseph Cassano was head of AIG's financial-products unit until his retirement was announced Feb. 29. The business sold credit-default swaps, the contracts that plunged in value as the mortgage securities they guaranteed declined, causing more than $25 billion in writedowns at AIG.

A Cuomo case against former AIG Chief Executive Maurice ``Hank'' Greenberg, over an alleged multibillion fraud at the company, is pending in New York state court. Cuomo wouldn't comment today on that case, or on whether Greenberg deserves any blame for AIG's condition.

Robert Willumstad, who replaced Sullivan as AIG CEO until the government takeover ended his three-month tenure, said today it would be ``pretty tough'' to recover compensation from former employees.

``They got paid based on an agreement between the company,'' Willumstad said on CNBC. ``It's pretty hard to go back and ask them to give back money they presumably earned fairly at the time.''

To contact the reporters on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net; Hugh Son in New York at hson1@bloomberg.net.

[HOLLYWOOD]

It's pretty FAT gig at most of these 'CORPORATIONS' getting that 'KEY' to the EXECUTIVE WASHROOM!

So many fat cats I worked for had their LEASE MANSIONS expensed to company earnings, retreats, boondoggles, yotta yotta...

Experiencing this first hand... it's like it's all expected and mandated by executives/officers and it's just getting into that inner circle. So much soft money and reimburstments cash paid out, BTW, the politicians do this on all these "BUSINESS TRAVELS" AND AIG's retreat, was the same place many US Congressional politicians had their BOONDOGGLES, charging $2-3K worth of food reimbursements and $5K in room expenses.

THERE'S NO DIFFERENCE! Congressional Members have done the exact same thing as AIG did last month... All with TAXPAYERS money, while driving the country broke!

[Johnnybags]

to run it, Togas and Italy with statues peeing out champagne, those AIG clowns have no vision.

[torchbearer]

It's pretty FAT gig at most of these 'CORPORATIONS' getting that 'KEY' to the EXECUTIVE WASHROOM!

So many fat cats I worked for had their LEASE MANSIONS expensed to company earnings, retreats, boondoggles, yotta yotta...

Experiencing this first hand... it's like it's all expected and mandated by executives/officers and it's just getting into that inner circle. So much soft money and reimburstments cash paid out, BTW, the politicians do this on all these "BUSINESS TRAVELS" AND AIG's retreat, was the same place many US Congressional politicians had their BOONDOGGLES, charging $2-3K worth of food reimbursements and $5K in room expenses.

THERE'S NO DIFFERENCE! Congressional Members have done the exact same thing as AIG did last month... All with TAXPAYERS money, while driving the country broke!

Almost like a nobility class of people in this country to live high on the hog off of other people's toil.

[jcarcinogen]

Almost like a nobility class of people in this country to live high on the hog off of other people's toil.

Kinda like serfdom, or the Great Depression...

http://www.slaveuprising.com/images/slaves.jpg

[torchbearer]

bump

[cheapseats]

Retreat Goers, and those who planned/authorized it, should be ordered to repay the U.S. Treasury out of the deeply lined pockets of their well tailored suits.