Saturday, July 13, 2024
24.6 C
Lagos

Ex-AIG Chairman, Greenberg, Face Fraud Trial

New York’s highest court again rejected a bid by former American International Group Inc. Chairman, Maurice “Hank” Greenberg to dismiss the state’s decade-old fraud suit against him, clearing a path for a trial.

Greenberg, 91, stepped down as CEO of AIG in March 2005 after building it into the world’s largest insurer over four decades.

Shortly thereafter, company officials said one of its transactions was improper, restated its earnings by $3.4 billion and paid $1.6 billion to settle claims by regulators.

Greenberg and former AIG Chief Financial Officer, Howard Smith were sued the next month by then Attorney General, Eliot Spitzer under the State’s Martin Act, an almost century-old law that gives prosecutors the power to probe investment frauds, Ponzi schemes and other forms of white-collar crime.

Spitzer alleged Greenberg and Smith were responsible for transactions to hide a decline in the company’s loss reserves and mischaracterise underwriting losses.

Since then, Greenberg has faced off against three successive attorneys general in the case, which was set to go to trial in June 2015 before an appeals court in Manhattan sent it to the state’s high court in Albany for review.

The lawsuit will return to New York State Supreme Court Justice Charles Ramos in Manhattan for trial.

Greenberg said in a statement that Thursday’s decision fails to address his main argument on appeal—that the relief sought by the Attorney General is barred by settlements with AIG and the Securities and Exchange Commission.

Considering Options
Greenberg “is considering his options in light of this decision, which he believes flies in the face of both the court’s own precedent and federal law.”

In a statement, Attorney General, Eric Schneiderman said he was “very pleased the people of New York will finally have a chance to obtain justice at trial.”

“We look forward to demonstrating that Greenberg and his associates orchestrated two major frauds that caused massive losses to AIG’s shareholders,” he said.

Greenberg had argued that the Martin Act and another state law didn’t allow the attorney general to seek to bar him or Smith from the securities industry, ban them from serving as officers or directors of public companies, and ask for repayment of wrongfully obtained profits.

The court in Albany disagreed, saying the relevant laws allow the attorney general to seek a range of remedies including repayment.

“The Martin Act contains a broad, residual-relief clause, providing courts with the authority, in any action brought under the act, to ‘grant such other and further relief as may be proper,’” the Court of Appeals said.

Powerful Allies
State prosecutors dropped their demand for monetary damages after AIG shareholders settled claims against the company for $115 million.

But they continued seeking to force Greenberg and Smith to disgorge any performance-based bonuses that may be related to the transactions and to have the two men barred from the securities industry and from serving as corporate directors.

Greenberg has been supported by high-powered allies in his fight against the attorney general, including former New York governors George Pataki and the late Mario Cuomo.

The case stems from two reinsurance transactions: a deal with Berkshire Hathaway Inc.’s General Reinsurance Corp. used to reverse a decline in loss reserves at AIG and an agreement with CAPCO Reinsurance Co.

Four former Gen Re executives and one from AIG were convicted of accounting fraud charges in 2008 but won reversals in 2011. Federal prosecutors agreed to drop charges in 2012 under deferred-prosecution agreements after the former executives admitted “aspects” of the Gen Re deal were fraudulent.

Meanwhile, Greenberg sued the U.S. government over the 2008 bailout of AIG, claiming the company’s equity was wrongfully taken.

His Starr International Co. is currently appealing a Federal Court ruling from last year that found the bailout was illegal but didn’t award any of the $40 billion in damages that Greenberg sought. The court said he wasn’t entitled to compensation because AIG likely would have filed for bankruptcy if not for the rescue.

The case is State of New York v. Greenberg, 401720-2005, New York State Supreme Court.

spot_img

Hot this week

NGX Group’s Revolutionary e-Offering Platform Goes Live Following SEC Approval

Nigerian Exchange Group (NGX Group) has unveiled NGX Invest,...

Commonwealth Short Story Award Winner Releases The Talent Coach

Dr. Frederick Mordi, a Commonwealth Short Story Award winner,...

NAICOM, NFIU to Strengthen Partnership on Financial Regulation

From Left: Mr. Ahmed Adamu Director, Innovation & Regulation...

Sterling One Foundation, United Nations Nigeria Unveil Africa Social Impact Summit 2024

The official press conference for the Africa Social Impact...

Access Holdings: Facts Behind the Offer Session at NGX

L-R: Morounke Olufemi, Group Chief Financial Officer, Access Holdings...

Topics

Stanbic IBTC Bank: Nigeria PMI Dips to 4-Month Low at Start of 2022

The opening month of 2022 revealed a solid expansion...

CBN: New Naira Notes Ready by December 15, 2022

Press Remarks by CBN Governor, Godwin Emefiele on Issuance...

Emirates Fetes Children to Film Show on May 27

Emirates added fun to the 2018 children’s Day by...

The PwC Mine 2016 Global Report

2015 was a race to the bottom with many...

BUHARINOMICS: Charting Path to Sustainable Economic Renaissance

The presidential election was over on Saturday, March 28, 2015. It is now a historical document for academic research and street political analysis. On March 28, CHANGE triumphed over TRANSFORMATION AGENDA, leading to the emergence of General Muhammadu Buhari as President-Elect, Federal Republic of Nigeria. On May 29, Buhari will assume the leadership of the nation, bringing to an end, the regime of Goodluck Jonathan. For Buhari, it is a long road to Aso Rock. Three times he contested and lost. And three times he dusted the stinking ashes of defeat to rise again to seek for the same office. And on the fourth effort, he won. Either fortune smiled on him or the Gods took pity on him and handed him the office to break the cycle of defeat and save him from the poisoned pen of harsh historians and political propagandists.

First Bank May Sack 2,740 over Branch Downsizing

Reports N64bn Loss in 2014 First Bank Holdings Plc may sack 2, 740 staff over the planed downsizing of unprofitable branches nationwide. The bank also reported loss of N64 billion in the 2014 financial year. Mr. Bisi Onasanya, Group Managing Director/CEO, First Bank, said at the bank’s Facts-Behind-The-Figures presentation at the Nigerian Stock Exchange (NSE) that the bank will close unviable branches across the country to reduce cost. He assured however that no staff of the bank will lose his or her job in the exercise.

The Need for Non-Oil Sector Development

The current state of oil prices in the international market is a divine blessing for Nigeria. It represents a unique opportunity for Nigeria to re-discover itself and diversify its sources of national revenue or slump into deeper financial crisis and poverty. It has been proven in the lives of individuals, organisations and nations, that certain negative experiences or consequences spurred them to innovations and critical thinking, and led them to greater heights. It is our hope that such could become of our own country.

N300m Insurance Rebranding Project Stirs Market

The N300 million rebranding project by the insurance industry...
spot_img

Related Articles

Popular Categories

spot_imgspot_img