AIGs Greenberg Takes The FifthFor Now

Mr. Greenbergs lead attorney, David Boies, had announced the day before his client was scheduled to testify that he would not be answering questions, explaining that the attorney general's office had not given him enough time to prepare.

According to statements by Mr. Spitzer, investigators in part are looking into offshore entities created by AIG that they suspect were fraudulent. The probe is also looking at an AIG deal involving a finite reinsurance arrangement with General Re, a subsidiary of Berkshire Hathawayheaded by Warren Buffet, who testified on April 11, the day before Mr. Greenberg.

Mr. Spitzer, in a televised ABC interview on April 10, said that evidence is "overwhelming these were transactions created for the purpose of deceiving the market. We call that fraud."

In the ABC interview, Mr. Spitzer said his office believed Mr. Buffet could "shed light on a series of transactions thatHank Greenberg participated in." He added while Mr. Buffet was "not a subject or a target of our investigation, there are some ambiguities that will be hopefully addressedHe is a witness in our view, and the focus of this investigation is AIG and the much broader reach of the offshore entities that AIG has created that we believe were, in many respects, fraudulent."

Mr. Boies complained in a commentary in The Wall Street Journal on April 11 that his client risked "being set up" by open-ended questioning, and that the interrogation procedure did not allow objections from his attorneys and did not permit them to record his testimony or obtain a transcript.

According to a statement from Mr. Boies, "the great number of transactions under inquiry, the thousands of documents relevant to these transactions to which Mr. Greenberg has not yet been given access, and the fact that many of these transactions took place from five-to-20 years ago have precluded Mr. Greenberg from adequately preparing for this testimony at this time."

He said that all requests by Mr. Greenberg to adjourn the April 12 subpoena date to give him reasonable time to prepare had been denied.

Mr. Greenbergs attorneys, Mr. Boies reported, unanimously advised him that under the circumstances he should respectfully decline to testify until all relevant documents have been provided to him and he is fully prepared.

Mr. Spitzers representative, Brad Maione, said there would be no response to Mr. Greenbergs statement.

In addition to the remarks from Mr. Boies, Mr. Greenberg released his own comments saying he had "devoted my life" to building AIG.

He quit as CEO on March 14, and 13 days later retired as chairman, "to ensure that all current questions and controversies regarding the business and the financial reporting of AIG, and my role and conduct in those matters, be resolved independently by the company and its board of directors without interference or influence by me."

Mr. Greenberg, who was legendary for his tight control and intimate knowledge of AIG during his 38-year tenure, said he was "generally in charge of the overall conduct of the business. I was familiar with many, but certainly not all, or even a significant percentage of the literally millions of transactions each year in approximately 130 countries. I made many decisions and approved many decisions by many colleagues. In many cases, I made general decisions which were then implemented by others without my involvement. Many other decisions and actions were taken by others in the company without my participation."

He added that he is "willing to accept responsibility and to account for the performance of my duties, but I believe that good order and fairness require that I have an adequate opportunity to be advised of the issues to be investigated and to my alleged involvement therein."

Mr. Greenberg's stock transfer to his wife involved a gift of 41.4 million shares, which have since declined in value. The filing explained that Mr. Greenberg is in charge of trusts for the benefit of children and grandchildren. It states that he "disclaims the beneficial ownership of, and any pecuniary interest in, the shares of AIG common stock held by these trusts and by his wife."

The filing also explains that Mr. Greenberg holds 17 percent of the common stock of C.V. Starr & Company Inc.the Bermuda-based company that holds an interest in AIG. According to the filing, Mr. Greenberg disclaims the beneficial ownership of, and any monetary interest in the shares of AIG stock held by Starr. While resigning his AIG positions, Mr. Greenberg remains as chairman of C.V Starr.

Meanwhile, the SEC obtained a court order earlier this month to prevent AIG, C.V. Star and Mr. Greenberg from interfering with documents the SEC wants for its probe. Prior to the order issued by the U.S. District Court in Manhattan, there were reports that documents were being removed from AIGs offices in Bermuda, where C.V. Starr also had space.

The order prohibits those named from interfering with the ability of the SEC to obtain "any and all documents in the respondents' possession or control." It also provides a procedure for documents outside the United States to be secured, brought to the United States, and produced to the SEC and the New York attorney general.

"We sought this order in response to reports of the movement of documents subject to this investigation," said Mark K. Schonfeld, the director of the SEC's Northeast regional office. "This order will ensure the security and integrity of documents is preserved and that relevant evidence will be available in our ongoing investigation."

The SEC said commission staff issued subpoenas to Mr. Greenberg, AIG, C.V. Starr and Starr International Company Inc. (SICO) between March 25 and April 1.

According to the order, there is a need for preserving the security, location and integrity of documents relevant to the SEC's ongoing investigation. The order prohibits Mr. Greenberg and the named companies from interfering with the SECs ability to obtain documents in their possession or control. With respect to documents whose ownership and control are in dispute, the order prohibits respondents from removing such documents from AIG premises and provides a procedure by which such documents are handled.

Reproduced from National Underwriter Edition, April 15, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.