The trial judge presiding over the stock ownership battle between American International Group and Starr International Company said he doubts AIG can prove its case.
During a break with the jury out of the room, U.S. District Court Judge Jed D. Rakoff told AIG attorneys they would have to present better evidence to substantiate their case against SICO.
AIG, New York, is suing its former privately owned partner SICO over control of AIG stock worth $4.3 billion in 2005.
The insurance conglomerate is also suing SICO for breach of faith for its handling of a deferred compensation program for a select group of executives under the SICO and AIG umbrella. The payments were made with a portion of the profits SICO made from its holdings of AIG stock.
Yesterday was the fifth day on the witness stand for former AIG chairman and chief executive officer Maurice R. Greenberg, who was forced out of AIG in 2005. Greenberg continued as chairman of SICO and presided over its split from AIG shortly after he left the company.
Rakoff questioned the direction of AIG attorney Theodore Wells’ line of questioning, saying that in going over past testimony in an effort to impeach Greenberg’s testimony, he had not shown how speeches the former executive gave about the deferred compensation plan legally bind SICO to continuing the program.
“Whether [the program] was discontinued unilaterally or by mutual agreement…I doubt it would be a legally enforceable act,” Rakoff said about SICO’s ending of the program. He also told Wells that he questioned whether Greenberg’s statement about the program lasting 200 years made it legally binding.
“I’m extremely doubtful about it,” he said, adding, “I don’t think it legally holds him to it.”
Rakoff also seemed to be showing impatience with the pace of the trial, telling attorneys for both sides that from his review of the witness list, “So far, I am mystified why any of these experts have any relevance to this case at all.” He repeated “at all!” loudly.
SICO’s attorney, David Boies, wrapped up his cross-examination of Greenberg by having his client repeat his view that SICO created the more than 30-year-old compensation program to benefit a select group of employees and AIG itself. Greenberg testified that SICO paid the awards every two years at the discretion of its voting shareholders.
In his testimony, Greenberg said SICO received its shares as part of the incorporation of C.V. Starr Insurance Co. and SICO, which remained private entities, and the integration of publicly held insurers that formed AIG in 1970.
Wells, in his re-direct examination yesterday, questioned where Greenberg got his information that AIG had sought to end its relationship with SICO after Greenberg was forced out of AIG in the midst of an accounting scandal. Greenberg said a hostile relationship that developed between the two companies was one of the major reasons for ending the compensation program.
Wells also raised a question about whether an attorney for AIG’s outside board of directors ever told Greenberg that it was not a good idea to have an outside company pay compensation to AIG employees.
Greenberg has stressed that while SICO is a financial vehicle, its ultimate goal is to fund a charitable trust, the Starr Foundation. Wells attempted to shake that contention, saying there was nothing in available documents to show that there was any mechanism in place to enforce that goal.
Attorneys for both sides indicated that they should wrap their questioning of Greenberg today.