NYT: Greenberg Cheated Defrauded Foundation

Hank Greenberg, the former head of AIG, was a Wall Street icon for decades. Today Gretchen Morgenson reports that Spitzer is on his tail and it doesn’t look good for Hank:

Eliot Spitzer, the New York attorney general, submitted a report yesterday as part of his lawsuit against Maurice R. Greenberg, the former chief executive of American International Group, contending that Mr. Greenberg unfairly enriched himself and other A.I.G. executives in a series of transactions that violated the will of Cornelius Vander Starr, the company’s founder, and defrauded a foundation he created.
The questionable transactions took place more than 35 years ago as the far-flung insurance operations built by Mr. Starr starting in 1919 were being melded into A.I.G., the report said. After Mr. Starr died in 1968, Mr. Greenberg and his colleagues, as executors of his estate, benefited by selling assets at fire-sale prices to companies they controlled, it stated.
Almost immediately, the report said, these executives turned around and sold the assets at far higher prices to A.I.G., which then set some of them aside for use as a compensation pool for the company’s executives. Because those shares ultimately amounted to 12 percent of A.I.G.’s outstanding stock, Mr. Greenberg was able to cement his control of the company.
According to the report, Mr. Greenberg and his associates cheated the Starr Foundation, set up by Mr. Starr to benefit educational and cultural institutions, by selling assets that were worth more than $30 million for just $2 million. The Starr Foundation is one of the largest charitable organizations in the nation, with $3.5 billion in assets.

Posted by on December 15th, 2005 at 9:49 am


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