AIG has filed a lawsuit against seven former executives, including Maurice R. "Hank" Greenberg, alleging a breach of fiduciary duty in connection with the handling of a block of AIG shares worth about $20 billion, according to court documents.

The shares, which make up 9 percent of AIG stock, are owned by Starr International Company Inc. (SICO), controlled by Mr. Greenberg.

The lawsuit, filed in the New York State Supreme Court, New York County, also names Howard I. Smith, Edward E. Matthews, Ernest E. Stempel, L. Michael Murphy, John J. Roberts and Houghton Freeman.

It states that the shares in question were intended to be used only to protect AIG from hostile takeovers and to provide incentive compensation to current and future generations of AIG employees.

The complaint adds that AIG officers and directors, including the defendants, had operated and directed SICO "to serve as fiduciaries of AIG and guardians of the acquired stock" to ensure that the shares were used only for their intended purposes.

The defendants breached their fiduciary duty, the complaint contends, in March 2005 when Mr. Greenberg was forced to resign as chief executive officer of AIG and Mr. Smith was ousted as chief financial officer. At that time, the complaint states, the defendants "seized control of SICO" and "caused SICO to breach its contractual and fiduciary duties to AIG, and misappropriated the acquired stock for their own benefit."

Chris Winans, a spokesman for AIG, said this complaint is separate from, but related to, a federal lawsuit in which AIG has filed a counterclaim for control of the stock. He said that in July 2005, SICO sued AIG seeking assets that it believed it was entitled to. AIG filed the counterclaim to get control of the 9 percent of AIG stock owned by SICO.

Describing the most recent complaint filed in state court, Mr. Winans explained, "What this suit basically says is these are the key individuals...who have served on SICO's board and approved its actions since [Mr. Greenberg] was forced to resign from AIG in March of 2005. What we're saying is that they breached their fiduciary duties to AIG when, in 2005 and after, they engaged in conduct that violated their commitment to safeguard and preserve that block of stock for use in long-term compensation plans."

Glen Rochkind, a spokesman for Starr International Company, said in a statement: "AIG' s new lawsuit merely repeats the same claims that it has been asserting in federal court for three years. Having apparently concluded that the federal case is not going well, AIG is now trying an end run around its own federal lawsuit."

He added, "This is a transparent attempt by AIG to distract attention from the mismanagement and breach of fiduciary duties of its current executives and board--misconduct that has cost AIG shareholders more than $60 billion this year alone."

Mr. Rochkind declined to comment on AIG's claims regarding the intended purpose of the shares.

Mr. Winans said AIG had to file the lawsuit because the three-year statute of limitations relevant to its claims was about to expire. He said AIG offered the defendants an agreement to suspend the statute of limitations until the federal lawsuit was decided, but the defendants declined.

"So we had no choice but to preserve our claims," Mr. Winans said. "We had to file this now because we were coming up on the three-year anniversary of the commencement of the conduct that gave rise to these claims of breach of fiduciary duty."

He added that AIG filed the complaint in state court because "breach of fiduciary duty claims are state law claims. There's no federal issue that would put it into a federal court."

Special Reports /

AIG Files Suit Against Greenberg, Other Former Execs

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