NU Online News Service
The conflict between Maurice Greenberg and American International Group, which forced him out as chief executive officer two years ago, saw yet another legal salvo fired in a Delaware Court yesterday.
C.V. Starr & Company–the investment and insurance firm where Mr. Greenberg now serves as chairman and CEO–is suing AIG for "hundreds of millions" of dollars that the insurer made with the firm, an announcement from his attorneys said.
The action, filed in Delaware Chancery Court, was a cross-claim in connection with a 2002 lawsuit against Mr. Greenberg by Teachers' Retirement System of Louisiana–an AIG shareholder. The suit alleges unfair transactions between C.V. Starr and AIG harmed the company by allowing Mr.Greenberg and other corporate officers to reap excess profits. Mr. Greenberg at the time ran both Starr and AIG.
AIG declined comment.
The Starr firm–also named as a Teachers' suit defendant–argued that if it is found liable, it should be entitled to recover profits it helped AIG earn from 2000 to 2005.
Over that period, according to C.V. Starr, AIG's share of premiums from business generated by Starr subsidiaries exceeded $5 billion.
Profits and benefits realized by AIG as a result of its relationship with C.V. Starr include, among other things, underwriting profits and investment income earned by AIG as a result of the insurance premiums generated by C.V. Starr during this period.
The case is before a Delaware judge, Vice Chancellor Leo Strine.
Lee Wolosky of Boies, Schiller & Flexner LLP, counsel to C.V. Starr, said, "At the appropriate time, we intend to take legal action against other persons who personally benefited from the C.V. Starr-AIG relationship."
Mr. Greenberg and his former company have been in a legal struggle ever since he was forced out amid investigations by the New York Attorney General's Office and federal authorities that examined allegations of accounting fraud and commercial insurance bid-rigging.
In the aftermath of lawsuits filed by New York, AIG paid a $1.6 billion settlement and made a financial restatement.
The company has since sued Mr. Greenberg, alleging he caused their woes. Mr. Greenberg has sued the company and management, charging the accounting restatement was due to their blunders.
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