Former American International Group Chairman and Chief Executive Officer Maurice Greenberg will not face criminal charges from New York authorities for alleged improper activity to boost the company's stock price, according to a state spokesman.
Speculation concerning that possibility had been ongoing since May when New York Attorney General Eliot Spitzer filed suit against AIG, charging that Mr. Greenberg and former AIG Chief Financial Officer Howard I. Smith engaged in a variety of fraudulent business transactions to bolster AIG's stock price.
At that time, Mr. Spitzer issued a statement saying that AIG management had "routinely and persistently resorted to deception and fraud…"
Mr. Spitzer's communications director, Darren Dopp, said today that the issue of criminal charges had "just got confused" by the media.
In April, when Mr. Greenberg was called in by state and federal investigators to answer questions, he invoked his Fifth Amendment right against self-incrimination and declined to answer. His lawyers said he did so because his company had denied him information he needed to respond to investigators questions.
According to Mr. Dopp, Mr. Spitzer said in April that he thought the AIG matter would be resolved in civil court. Mr. Spitzer's office, said Mr. Dopp, is now nearly ready to do so "with regard to the company." He said attorneys on the civil action against the company are making progress resolving it and "anticipate something happening before the end of the year."
In March, Mr. Greenberg quit his CEO and chairman's post. According to his attorneys he was forced to resign from those positions without proper deliberation by the full AIG board. Mr. Smith was dismissed by the company.
Mr. Dopp said the questionable AIG accounting transactions are being looked at criminally by federal authorities, notably the U.S. Attorney's Office in Manhattan, and the Department of Justice in Washington.
As to what agency might be considering criminal charges, he said, "Talk to AIG, they know it wasn't Spitzer."
An AIG spokesman said the company had no comment.
In May, AIG restated its financial results for the past five years, cutting earnings by 10 percent and reducing three percent of the company's book value. The company admitted then that certain transactions had been improperly booked. Earlier this month, another adjustment improved the company balance sheet, increasing retained earnings by $490 million.
Mr. Greenberg has said through his attorneys that he denies that he personally engaged in any fraudulent transaction.
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