Maurice “Hank” Greenberg, former CEO of American International Group, will have his day in court next month to answer charges by shareholders that he and other former company officials owe them nearly $1 billion.
A suit filed by the Teachers’ Retirement System of Louisiana says that company execs diverted funds to another firm, C.V. Starr, where they served as officers. They then collected big bonuses based on fees paid by AIG, according to the complaint.
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Bloomberg reports today that the Louisiana fund claims nearly half of $2.2 billion that Starr collected from AIG between 2000 and 2005 was in false commissions and fees.
Other officers named in the suit are former AIG CFO Howard Smith, former director Thomas Tizzio and former vice chairman Edward Matthews.
A trial is scheduled to begin Sept. 15 in Delaware Delaware Chancery Court.
Any damages awarded at the end of the case would be paid to AIG, which has reported losses totalling $13.2 billion in the first half of 2008.
Greenberg was forced out as AIG’s chief executive in 2005, but still serves as chairman & CEO of Starr. Starr and AIG stopped doing business with one another after Greenberg’ left AIG.
His resignation came amidst state and federal investigations - including a probe by then-Attorney General Eliot Spitzer - into whether AIG had misled stockholders about profits. The company paid more than $1.6 billion to settle the claims.
A separate suit filed by the Jacksonville (FL) Police and Fire Pension Fund in May accuses AIG and top execs of bolstering stock prices by understating the impact of the subprime mortgage crisis.
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