An independent review committee yesterday said it found no basis for the accusation that Maurice Greenberg, former head of American International Group, cheated a charitable foundation out of millions of dollars.

In December 2005, Eliot Spitzer–while serving as New York's attorney general–had issued a report charging that Mr. Greenberg and other executives had enriched themselves at the expense of The Starr Foundation created by AIG's founder, Cornelius Vander Starr.

According to Mr. Spitzer–now the state's governor–Mr. Greenberg and the other executors had carried out their alleged activities by selling Starr Foundation assets at bargain-basement prices to companies they controlled after Mr. Starr's death in 1968.

Mr. Spitzer's accusations were made in a report that is part of New York's ongoing lawsuit against Mr. Greenberg, who was forced out as AIG's chief executive officer and chairman in March 2005.

Mr. Spitzer wrote Starr Foundation President Florence Davis in New York, urging her to consider reconstituting the organization, which has Mr. Greenberg as chairman, as well as seeking recovery of assets.

After a 12-month study, however, a panel of retired judges created by the foundation concluded in a 180-page report “that the allegations against the executors are unfounded, and it would not be in the best interests of the foundation to pursue any litigation or other course of action against the executors of the Starr Estate…”

The panel found that the executors, who included Houghton Freeman, John J. Roberts, and Ernest E. Stempel in addition to Mr. Greenberg, had “acted in good faith” in selling various share assets, including Starr's minority interest in American International Underwriters Far East Inc., for $1,655 per share.

Mr. Spitzer contended the executors had sold that stock for $1 million when they knew it was worth $7.2 million, and if another transaction had been handled properly, the foundation would have assets of $750 million instead of $19 million.

The committee report said they made their findings after collecting 650,000 pages of documents, reviewed dozens of transcripts, and interviewed nearly “all of the surviving participants or witnesses” to the matters raised in Mr. Spitzer's report.

In addition to retired Appellate Division Justice William Thompson and former Nassau County Surrogate Judge Raymond Radigan, the three-member committee included Starr Foundation President Florence Davis. Counsels to the panel were John J. Barnosky, and Lawrence J. Zweifach.

According to The Starr Foundation Web site, in the past two years, the foundation has made more than $650 million in grant commitments and payments of more than $360 million to various educational, health, cultural and social service groups.

Spokespersons for the New York Attorney General's Office and Mr. Greenberg did not immediately respond to requests for comment.

Special Reports /

Panel Clears Greenberg Of Foundation Misdeeds

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