The UK Serious Fraud Office announced that it had launched apreliminary inquiry today into the UK operations of AmericanInternational Group's AIG Financial Products Corp. subsidiary.

Its announcement said it is cooperating with U.S. authoritieswhom, it noted, are already conducting separate, independentinvestigations involving conduct at AIG Financial ProductsCorp.

In a financial filing AIG has said it is being looked at by theSecurities and Exchange Commission, Department of Justice and FBIover the AIGFP valuation disclosures concerning its portfolio.

SFO said it is also working on the probe with the UK-basedfinancial services regulator, the Financial Services Authority. SFOnoted that its inquiry does not concern the insurance operations ofAIG in the UK or elsewhere.

The agency said its “swift action is in keeping with its newapproach under the current director of intervening proactively atan early stage when it is made aware of irregularities whichwarrant further investigation.”

The Director of the Serious Fraud Office, Richard Alderman, saidin a statement that, “It is right for us to look into the UKoperations of AIG Financial Products Corp., to determine if therehas been criminal conduct. We will use our full range of powers toseek information and to speak to those with an inside knowledge ofthe company's operations.”

AIG Financial Products Corp. and AIG are cooperating with theSFO and have offered their assistance to the SFO as it conducts itsinquiry.

In addition to announcing that it is cooperating with the probe,AIG noted that it had disclosed last year that it was in theprocess of unwinding certain of AIGFP's and its subsidiaries'businesses and portfolios, including those in the UK.

The company said there are approximately 370 employees in AIGFPworldwide who are working on the winding down of the business.

AIGFP's involvement in credit default swaps on collateralizeddebt obligations caused the parent conglomerate massive losses,which forced it to give the U.S. government a 79.9 percent interestin the company in exchange for billions in government loans.

AIGFP was headed by Joseph Cassano who was fired Feb. 29, 2008after his operation lost $11 billion. He was allowed to retain $34million in bonuses and was kept on for awhile as an AIG consultantat a $1 million per month salary.

The London Times reported that AIG is one of around sixpreliminary investigations into suspected financial scandals beingconducted by the SFO and include the Bernard Madoff, pyramidscheme.

(Daniel Hays can be contacted at [email protected] or201-526-1245)