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Greenberg Questions AIG Restatement Strategy

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Maurice Greenberg is criticizing the way American International Group Inc. is communicating with the public and the way it is communicating with him.[@@]

Greenberg, former chairman of AIG, New York, sent the AIG board a letter complaining about a press release the board issued May 1. The release deals with AIG’s plans to restate 5 years of financial results.

One group of accounting changes will cut shareholder equity by about $2.7 billion and changes in accounting for derivatives will increase shareholder equity by $2.4 billion, leaving a net reduction of about $300 million, according to the May 1 press release.

“Given the innuendo contained in the AIG release of May 1, which can be interpreted as impugning the integrity of prior and present AIG management, I was surprised that the release provided no factual basis to explain why AIG or [company auditor] PricewaterhouseCoopers changed its position” on the accuracy of the earlier financial statements, Greenberg writes in his letter.

The proposed restatement involves hindsight analysis of “complicated accounting issues, which were originally made on a good faith basis by both former and present management and AIG’s auditors without objection or inquiry from the board or any member of the board,” Greenberg writes.

“I am distressed that the board’s release and future report are based upon a one-sided review of the issues,” Greenberg adds.

AIG and its auditors are conducting the restatements “without consulting former management or providing an opportunity for them or their counsel to provide relevant input,” Greenberg writes.

Greenberg says AIG’s move to issue restatements without talking to those who handled AIG’s finances in the first place “is beyond my comprehension.”

“I have known many of you for a long time and am puzzled by your refusal to share sufficient information with me to permit me to respond to vile accusations being made against me and to provide input which could make the board’s findings more complete and accurate,” Greenberg writes. “I have always attempted to act honorably and responsibly during my stewardship of the company. The record amply reveals the significant growth and accompanying prosperity enjoyed by the company throughout my tenure. To have all of the accomplishments of my management team despoiled by judgments seemingly based upon incomplete facts is exceedingly disturbing.”


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