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Regulation and Compliance > Federal Regulation

Barofsky: Feds Are Probing Bonuses

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The U.S. Department of Justice and other federal agencies are undertaking several investigations of the American International Group Inc. financial products unit retention bonuses.

The Justice Department is looking at options for recovering the funds paid to the unit executives, according to Neil Barofsky, special inspector general of the Troubled Asset Relief Program.

Barofsky testified about TARP program oversight before the Senate Finance Committee.

In his testimony, he said his office and the Justice Department are coordinating their bonus inquiries.

Barofsky said his own agency has an audit under way that seeks to determine the extent of the federal monitoring and enforcement of executive compensation restrictions imposed as a condition of federal financial assistance to organizations such as AIG, New York.

As part of this audit, he said, “We will be looking closely to ensure that the bonuses to AIG employees are not inconsistent with AIG’s legal or contractual obligations.”

He said he also plans to report to Congress on “the sequence of events” that led to the approval of the bonus payments by government officials — including the general approval of retention payments that was included in AIG’s agreement with Treasury in November 2008.

“To the extent that we find that there were miscommunications among AIG, Treasury and Federal Reserve officials regarding these payments, we will make recommendations to ensure that all parties involved in TARP related programs effectively communicate with one another,” Barofsky said.


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