The chief executive of Marsh & McLennan Companies Inc. says the company ousted top managers because they were responsible for contingency fee abuses that enveloped the brokerage.[@@]
Michael G. Cherkasky, chief executive officer and president of New York-based MMC, speaking at the company’s recent shareholder meeting, said that the removal of a number of management personnel, including his predecessor Jeffrey Greenberg, occurred because the board of directors held them responsible, even if they did not participate in the alleged abuses.
“We have made changes out of necessity and out of requirement,” Cherkasky told shareholders, referring to what the company has gone through since New York Attorney General Eliot Spitzer filed suit against MMC in October, accusing the company of rigging bids with insurers who paid off with hidden incentive fees.
He said a few managers were removed from the company because they were culpable, but others who did not participate still needed to be held responsible because the allegations of kickbacks and steering of accounts at Marsh, its insurance brokerage subsidiary, occurred on their watch.
The standard for working at Marsh is not complying with criminal law, said Cherkasky. “It should never be. That is much too low a standard. The standard for us is to have people who will hit our high standard, and we will hold people accountable.”
Along with Greenberg, Cherkasky named the company’s chief counsel, William L. Rosoff, as among those held responsible for what happened.
Rosoff resigned his position on the same day that it was announced that Roger E. Egan, president and chief operating officer of Marsh, and Christopher M. Treanor, Marsh’s chairman and chief executive officer of Global Placement, were asked to step down.
As part of the agreement with Spitzer, MMC agreed it would no longer accept contingent commissions, which accounted for more than $800 million of its revenues in 2003. The decline in revenue has resulted in more than 5,000 layoffs, Cherkasky said.
However, he pointed to a positive future for MMC, stating, “This was a company built to withstand a hurricane,” adding that he felt the company had passed that test.
“I’m not going to apologize anymore,” he added, referring to his public apology for the conduct of some in the company. “It is time to move forward.”