Greenberg Slams AIG Board

NU Online News Service, May 5, 11:45 a.m. EDT--Former American International Group Chief Executive Officer Maurice Greenberg lambasted company board members yesterday for what he believes are their high-handed methods in addressing disputed accounting issues and possible executive wrongdoing.

Mr. Greenberg's letter to board members centered on AIG's press release earlier this week detailing a planned restatement of five years of financial results due to accounting improprieties.

"Given the innuendo contained in the AIG release of May 1, which can be interpreted as impugning the integrity of prior and present AIG management, I was surprised that the release provided no factual basis to explain why AIG or [company auditor] PricewaterhouseCoopers changed its position," Mr. Greenberg wrote.

While the AIG press release said the accounting errors would result in an estimated $2.7 billion hit to shareholder equity, another accounting error would result in a $2.4 billion addition to the same metric, for a net reduction of $300 million.

Mr. Greenberg said the restatement issuance entails hindsight analysis about "complicated accounting issues, which were originally made on a good faith basis by both former and present management and AIG's auditors without objection or inquiry from the board or any member of the board."

For the past several months, AIG has been in the cross hairs of New York Attorney General Eliot Spitzer for, among other issues, its alleged misuse of finite reinsurance products to falsify earnings.

The May 1 release laid the blame for the alleged accounting misdeeds on "certain former members of senior management" who had been able to "circumvent controls over financial reporting."

It was well known that Mr. Greenberg was very much a hands-on CEO and would likely be one of the unnamed malfeasants.

"I am distressed that the board's release and future report are based upon a one-sided review of the issues," he wrote, noting that the restatements are being conducted "without consulting former management or providing an opportunity for them or their counsel to provide relevant input."

How the company could issue restatements without talking to those who handled AIG's finances in the first place, he said, "is beyond my comprehension."

On Tuesday, Mr. Greenberg threatened a lawsuit against the company to retrieve certain files that he needs for his defense but that the company has reportedly refused to hand over due to either present or pending subpoenas. An AIG spokesman had no comment on the matter.

"I have known many of you for a long time and am puzzled by your refusal to share sufficient information with me to permit me to respond to vile accusations being made against me and to provide input which could make the board's findings more complete and accurate," Mr. Greenberg wrote.

"I have always attempted to act honorably and responsibly during my stewardship of the company," he added. "The record amply reveals the significant growth and accompanying prosperity enjoyed by the company throughout my tenure. To have all of the accomplishments of my management team despoiled by judgments seemingly based upon incomplete facts is exceedingly disturbing."