A federal court judge in Washington has cleared for trial claims by former AIG CEO Maurice “Hank” Greenberg that the “federal government’s methodology in aiding a troubled American International Group amounted to an attempt to ‘steal the business.’” Greenberg refiled his suit last July through Starr International, which owns approximately 13 percent of AIG.
In his ruling Wednesday, Court of Claims Judge Thomas Wheeler dismissed all “derivative claims,” i.e. those filed on behalf of AIG. That was because, in January, AIG’s board decided not to join the lawsuit, and did so in such a way that even in the event Starr/Greenberg won the lawsuit, AIG would not benefit. AIG asked that it be dismissed as a derivative plaintiff in a court filing in April.
Jon Diat, a spokesman for AIG, noted that the decision “firmly upholds AIG board’s business judgment and the process [the board] followed.” Adding that, “We are pleased and believe the decision speaks for itself.”
In his decision, Wheeler acknowledged his pique that a lawyer for AIG had dared predict how he would ultimately rule as a contributing factor in Wednesday’s decision to clear the lawsuit for trial.
Wheeler also acknowledged that another contributing factor in his decision was an allegation that a Treasury official “made threatening statements to AIG’s board members when the board was fulfilling its legal obligation to consider entry into this lawsuit.” Wheeler said the “court is troubled that counsel for the Treasury Department (the defendant agency), made the statements.” He further cited the “media frenzy” in reaction to the proposition that AIG would join this lawsuit against the government.
He said media reports “contain inflammatory quotations from a number of public figures and elected officials who apparently lacked any understanding that AIG was required to consider entry into the lawsuit under the demand process of Delaware law. “It is unfortunate that AIG’s board members had to deal with this misplaced pressure and public outcry,” Wheeler said.
He reiterated that he had originally denied the government’s motion to dismiss the case by holding that, “assuming the truth of Starr’s allegations, Starr may maintain a direct claim for the taking of its equity and voting interests, because the Government extracted from the public shareholders, and redistributed to itself, a portion of the economic value and voting power embodied in the minority interest.”
The judge ordered the government to file an answer to Starr’s amended complaint on or before July 16, and that he will hold a conference with counsel July 9 at which time he will set a date for trial.