NU Online News Service, March 30, 11:26 a.m. EST
Former American International Group Inc. chief executive Maurice “Hank” Greenberg isn’t giving up on his $25 billion lawsuit against the U.S. over its bailout.
In a March 28 filing by Starr International Co., which Greenberg is chairman of, the company argues that it has a right to seek compensation for itself and AIG shareholders because the government illegally took AIG property through massive wealth transfers and mismanaged the 2008 bailout of AIG while preventing its collapse.
Late last year, Starr filed a lawsuit in the U.S. Court of Federal Claims against the government, claiming it violated the Constitution when it took majority ownership of AIG without compensating the company’s shareholders.
The government followed by filing a motion to dismiss the lawsuit, saying AIG asked and agreed to be rescued, and that Starr has no authority to sue.
Greenberg’s Starr says the government’s actions in AIG’s case “stood in stark contrast to the government’s far more favorable treatment of similarly situated entities [during the financial crisis].”
“Other companies received guarantees or loans at far more favorable interest rates, either of which would have addressed AIG’s liquidity problems without the massive wealth transfers mandated by the government,” says Starr, AIG’s largest shareholder before the bailout.
At one time the government held a 77 percent stake in AIG. It now holds about a 70 percent stake after AIG’s latest payback. However, Starr says the government violated the Fifth Amendment by taking private property for public use without just compensation.
Furthermore, the government cannot claim AIG consented to the deal when it denied shareholders the right to withhold consent—a circumvention of shareholders’ voting rights under state law, alleges Starr.
Starr adds that the government pressured AIG’s board to accept an inferior offer and misled the board to thinking it was the only offer.
“The government offered terms that were objectively grossly overreaching and much more extreme than alternatives that the government could have rationally accepted and would have accepted,” Starr proclaims in its court filing. “This strategy forced the AIG board into an unnecessary game of ‘chicken’ with the global economy, leaving the board with no choice but to yield.”