New York Attorney General Andrew Cuomo revealed Tuesday that American International Group Inc. gave bonuses of $1 million or more to 73 people in its Financial Products subsidiary, the unit largely responsible for the company’s meltdown.
Noting that 11 of those are no longer even there - including one who received a whopping $4.6 million - Cuomo questioned the assertion the bonuses were necessary to retain essential people.
“If AIG were confident in its claim that those who received these large bonuses were so vital to the orderly unwinding of the unit, one would expect them to freely provide the names and positions of those who got these bonuses,” Cuomo wrote in a letter to House Financial Services Committee Chairman Barney Frank.
AIG has also said it is contractually obligated to pay the bonuses and will try to reduce them by at least a third in 2009. But Cuomo disputed that as well, saying the firm negotiated reduced pay for that same group of employees to $1 each in 2009 in exchange for awarding the bonus retention packages.
“The fact that AIG engaged in this negotiation flies in the face of AIG’s assertion that it had no choice but to make these lavish multimillion dollar bonus payments,” he wrote. “It appears that AIG had far more leverage than they now claim.”
Since last fall, taxpayers have pumped more than $170 billion into the failing insurance giant, which was brought to its knees by complicated insurance products sold by members of the Financial Products subsidiary.
Cuomo has subpoenaed the company for the names and job titles of those who got $160 million in retention bonuses as AIG remains afloat only as a result of the investment of billions of taxpayer dollars.
“Last week, AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout. Something is deeply wrong with this outcome.”
Based on information already received, Cuomo said his office has determined that:
- The top recipient received more than $6.4 million;
- The top seven bonus recipients received more than $4 million each;
- The top ten bonus recipients received a combined $42 million;
- 22 individuals received bonuses of $2 million or more, and combined they received more than $72 million;
- 73 individuals received bonuses of $1 million or more;
Rep. Frank told reporters in Washington that the U.S. government, which now has an 80-percent stake in the company, should assert its ownership in order to block the retention payments. He said the government had a better chance of prevailing in court if it acted as an owner, rather than as a regulator intervening in the private sector.
Update Wednesday, March 18: AIG Chairman Edward Liddy responds to critics in an op-ed piece in the Washington Post.
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2 Comments
#1. Slim 03.18.2009
I will happily agree to be retained for a bonus of a mere $1.5 million. Of course, to make that work for me, I would need a salary increase to, say $300,000? And, in keeping with the spirit of how retention bonuses work for fat cats, I would immediately leave the company and spend the rest of the year playing golf and computer solitare.
#2. Grace Cruz 04.08.2009
I am not an employee of AIG. I am an investor that was ripped-off by AIG Annuity. I want my story told. I do not think anyone knows my side. I do not want my name mentioned. I will be sueing Washington Mutual Bank and AIG and the agent who sold me a false story just for me to invest.
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