Former American International Group, Inc. chairman MauriceGreenberg has taken aim at his former company, calling its $4billion earnings restatement "exaggerated and unnecessary" andcreated to justify his ouster.

|

In a 50-page document prepared by Mr. Greenberg's lawyers, andpresented to regulators yesterday, Mr. Greenberg laid much of theblame of the accounting discrepancies at the feet of otherexecutives and the company's auditor PricewaterhouseCoopers, NewYork.

|

Mr. Greenberg has been the target of both state and federalinvestigators for alleged accounting misdeeds that resulted in theinsurance giant's late May financial restatement that lowered netincome by $4 billion.

|

In his attorneys' verbal attack on the AIG accountingrestatement Mr. Greenberg argued, "PricewaterhouseCoopers' pastperformance warrants a close examination," the so-called "whitepaper" stated, noting that no alarms were sounded by auditors aftermore than 50,000 person-hours were devoted to a review of thecompany's internal controls that was completed shortly before Mr.Greenberg's resignation in March from his top operating post at thecompany.

|

In addition, the paper notes the fact that five top executives,including chief financial officer Steven Bensinger, served with theauditing firm prior to their AIG service.

|

The restatement contained an additional reserving of $850million for asbestos and environmental claims that Mr. Greenbergsaid was conducted without the usual lengthy and rigorous reviewthat would normally accompany such a move.

|

All these moves had two goals – to justify Mr. Greenberg'sfiring and make next year's numbers look better with a lowerjumping off point, the document argued.

|

"These changes to the Form 10K may be an attempt by newmanagement to set the bar as low as possible on the investmentcommunity's expectation of AIG earnings going forward," thestatement said.

|

As for the reinsurance transaction with the Berkshire Hathawaysubsidiary General Re Corp that was questioned for the risktransfer it involved, Mr. Greenberg reiterated his previous claimsthat the Financial Accounting Standards Board has yet to establishfirm standards as to what constitutes risk transfer.

|

In addition, it was argued that the Gen Re deal would not haverequired reporting under the new National Association of InsuranceCommissioners guidelines enacted in the aftermath of thescandal.

|

Mr. Greenberg, according to his attorneys, has refused totestify when questioned about accounting irregularities by New YorkAttorney General Eliot Spitzer and has invoked his right againstself incrimination.

|

However, the first sentence of the white paper states: "Mr.Greenberg denies that he personally engaged in any fraudulenttransaction."

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.