Maurice “Hank” Greenberg had the right to take $4.3 billion in stock from a retirement bonus plan for executives of taxpayer bailout recipient American International Group when he was booted as its CEO in 2005, because they were owned by a privately held company – which he controls.
That was the defense offered as the first day of testimony began yesterday in New York, where AIG is trying to recover those billions, and 185 million AIG shares, from Greenberg, 84.
In his opening statement, AIG lawyer Theodore V. Wells Jr. said, “Hank Greenberg was mad. He was angry,” when he approved the sale of millions of shares of stock held by Starr International, which was formed 40 years ago specifically to pay retirement bonuses to top-performing executives of AIG. A company with such an unusual purpose could not be created under current tax law.
Greenberg remains as chairman of Starr International, named for his mentor, the late Cornelius Vander Starr, who assembled a network of mostly offshore insurance businesses that became AIG.
AIG contends that the disputed billions were held in trust by the Starr firm, and Greenberg violated that trust when he cashed in the shares.
Telling the jury that it is a “videotaped confession,” Wells played several recorded clips of Greenberg speaking about the retirement fund and its responsibilities to intended recipients.
Greenberg attorney David Boies, a former federal prosecutor who represented Al Gore in challenging results of the 2000 presidential election, told the jury, “I disagree with a great many things that Mr. Wells said.”
Documents to be presented at trial, he continued, will show that the stock sold by Greenberg didn’t belong to AIG. “Look in this case not to what people said after this lawsuit started,” Boies asked the jury. “Look to what they said and did and wrote before the lawsuit started.”
Among Wells’ former clients are junk bond king and accused racketeer Michael Milken, who went to prison in a plea bargain that dropped the rackets charges, and Lewis “Scooter” Libby, former Vice President Dick Cheney’s one-time chief of staff and now also a convicted felon.
AIG first said it would use proceeds from the trial to start a new bonus plan for its executives, but recently changed that to repaying its $182 billion bailout debt to taxpayers.
U.S. District Judge Jed S. Rakoff has ruled that the bailout is off limits as evidence in Greenberg’s civil trial.
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