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Life Health > Life Insurance

Greenberg Slams AIG Restatement

By Steve Tuckey

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Former American International Group Inc. Chairman Maurice Greenberg is taking aim at his former company, calling its recent restatement “exaggerated and unnecessary” and saying the restatement was created to justify his ouster.[@@]

In a 50-page “white paper” prepared by Greenberg’s lawyers, Greenberg lays much of the blame for the accounting discrepancies at the feet of other executives and at the feet of the company’s auditor, PricewaterhouseCoopers L.L.P., New York.

AIG’s May financial restatement lowered 2004 net income by 12%, or $1.3 billion, and it knocked a total of 10% off of all AIG net income reported for the 2000-2004 time period.

Greenberg has been the target of both state and federal investigations in connection with questions about the restatement.

“PricewaterhouseCoopers’ past performance warrants a close examination,” Greenberg’s attorneys argue in the white paper.

The attorneys note that, shortly before Greenberg resigned from his operating post at AIG in March, the auditors spent more than 50,000 “person hours” reviewing AIG’s internal controls. The auditors sounded no alarms after completing their review, Greenberg’s attorneys note.

In addition, 5 top executives, including Steven Bensinger, AIG’s chief financial officer, served with PricewaterhouseCoopers before going to work for AIG, the attorneys write.

The authors of the restatement were trying to justify Greenberg’s firing, the attorneys write.

In addition, “these changes to the [official Form 10-K annual report] may be an attempt by new management to set the bar as low as possible on the investment community’s expectation of AIG earnings going forward,” the attorneys write.

The white paper also mentions a life settlement reinsurance transaction. Some officials have questioned whether the transaction really trasferred risk.

In the white paper, Greenberg’s attorneys repeat previous claims that the Financial Accounting Standards Board has yet to establish firm standards as to what constitutes risk transfer.

Greenberg has refused to testify when questioned about accounting irregularities by New York Attorney General Eliot Spitzer, according to his attorneys.

However, the first sentence of the white paper states, “Mr. Greenberg denies that he personally engaged in any fraudulent transaction.”

Representatives from AIG were not immediately available to comment on the Greenberg white paper.

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