HARTFORD, CONN.–Information about an American International Group reinsurance deal that allegedly was a sham transaction to inflate the insurer's financial picture was provided to Cologne Re auditors, evidence in federal court revealed today.

The contact with auditors was disclosed during the cross examination in U.S. District Court here of John Houldsworth, a former chief executive at Cologne Re Dublin, a subsidiary of the General Reinsurance unit of Berkshire Hathaway.

Mr. Houldsworth, who confessed to a role in the AIG deal and is now a government witness, is testifying against a group of executives who are on trial for securities fraud.

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