Is Maurice R. “Hank” Greenberg trying to wreak revenge upon AIG, the company he once led?
Or is he merely a capitalist attempting to make some money in a troubled business climate?
The debate over this question broke out after Tuesday’s New York Times story about Greenberg’s actions at C.V. Starr & Company Inc., the insurance group he now heads as chairman and CEO.
The story suggested that Greenberg is poaching executives and business from AIG, making it more difficult for his former company to pay back the billions of dollars in loans it has received form the U.S.
And the Times reported that the government’s decision last week to limit some executive pay at AIG may further prompt that company’s employees to jump to C.V. Starr, a private company that is not under any government pay guidelines.
In response, C.V. Starr released a statement saying that “only 13″ former AIG employees have joined C.V. Starr. “Far more, we believe, have joined other, larger, companies,” the statement said.
The statement went on to blame AIG’s current problems on the government’s decision to liquidate the company’s assets rather than to allow it to compete in the marketplace.
Greenberg, 84, was forced out of AIG in 2005 in the wake of an accounting scandal.
By 2008, AIG was on the brink of collapse because of its involvement in risky financial products. The U.S. government then loaned the company about $134 billion. In exchange, it received a nearly 80 percent stake in the company.
Greenberg has repeatedly argued that he was not responsible for the business practices that put AIG in the soup. And he opposed the government’s bailout methods.
Furthermore, as Heidi Moore of New York magazine points out, Greenberg still owns 12 percent of AIG’s stock. Consequently, destroying AIG would not seem in his best interest.
Nonetheless, the Times story prompted a series of outraged comments from readers. “Hell has no fury like a conceited, greedy, embittered executive ousted before his time,” wrote Sylvia from New York.
However, Joseph Devlin of the Massachusetts School of Law at Andover told New York that Greenberg might simply be after a profit.
“I don’t think he’s doing it for any reason but to benefit himself financially,” Devlin said. “He’s trying to do what entrepreneurs do and make money.”
The latest stage of Greenberg’s career is laced with ironies.
C.V. Starr, the company Greenberg now leads, was founded by Cornelius Vander Starr, the same person who started AIG.
At C.V. Starr, Greenberg is investing with money AIG didn’t want him to have. The company had argued that one of Greenberg’s company wasn’t due $4.3 billion in AIG stock. Greenberg argued otherwise and prevailed this summer.
And if C.V. Starr is linked to AIG, symmetry demands that it also be linked to another damaged Wall Street icon, Lehman Brothers Holding Inc.
The Times reported that C.V. Starr this month leased 141,000 square feet of office space in a former Lehman Brothers headquarters on Park Avenue in Manhattan.
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