AIG Defends Another Resort Event

American International Group was defending itself again yesterday against reports it paid for a lavish resort junket even as it was arranging for a greater government bailout.

The giant conglomerate put out a statement today denying any heavy spending in the wake of televised stories about a financial planners' seminar at the Pointe Hilton Squaw Peak Resort in Phoenix last week.

ABC News Phoenix outlet KNXV characterized the meeting–which did not display AIG logos–as a “secret gathering” and reported they had hidden videos of AIG executives at pools and spas.

Edward M. Liddy, chairman and chief executive officer of American International Group, responded with a statement that the news reports “grossly mischaracterized” the AIG seminar last week for 150 independent financial planners.

Mr. Liddy stressed that the financial planners “are not AIG employees. In addition, the cost to AIG for this event was minimal. More than 90 percent of the costs were paid either by sponsors or by the independent financial planners themselves.”

According to a statement released by AIG at the conference, 18 product sponsor firms that took part were underwriting $320,000 of the total meeting cost of $343,000, making the company's portion less than $25,000.

Mr. Liddy said it was essential for AIG to conduct such seminars “to keep independent financial planners abreast of investment products and services, including those offered by AIG. The financial planners are responsible for generating almost $200 million in revenue this year for AIG as of Sept. 30.”

AIG was first slammed over resort events on Oct. 7, when Rep. Henry Waxman, D-Calif. attacked the company at a hearing for what he said was a “week-long retreat for company executives” that involved “wining and dining at one of the most exclusive resorts in the nation”–the St. Regis in Monarch Beach, Calif.

The meeting, which took place less than one week after AIG secured the first of several government loans that now total $150 billion, was held to reward independent agents who brought business to the company.

Yesterday, Mr. Liddy said that he issued a directive to all AIG employees and subsidiaries on Oct. 10 to reduce expenses and conserve cash, “including cancelling all nonessential conferences or meetings, unnecessary travel and excessive overhead.”

Despite this action, a week later the company was jumped on by New York Attorney General Andrew Cuomo, who threatened a lawsuit if spending for conferences was not halted.

On Oct. 16, the company issued a joint announcement with Mr. Cuomo, saying AIG had replaced its chief financial officer, would cancel 160 conferences and events, and will seek to recover more than $40 million in payments to two former executives.

Mr. Liddy said that in addition to cancelling events, the company had “conducted a top-to-bottom review of all expenses of the Phoenix meeting in advance, and found that it was consistent with my Oct. 10 directive. This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer.”

KNXV spoke with Rep. Elijah Cummings, D-Md., and quoted him on the station's Web site as saying that Mr. Liddy should resign, and that AIG had come to the government and said “they were drowning and needed help. A person who is drowning doesn't jump up and start partying.”

The company statement released at the conference also announced it had cancelled an appearance by sportscaster and former Pittsburgh Steelers quarterback Terry Bradshaw.

It said an AIG Advisor Group had “conducted a top-to-bottom review of all AMC meeting expenses to validate that only expenses required to ensure the meeting's success are incurred. Consistent with that review, the company determined that the appearance of Terry Bradshaw as a guest speaker was not required. Although costs related to his appearance were to be paid by a product sponsor, his appearance has been cancelled.”

In commenting on the event, Larry Roth, president and CEO of AIG Advisor Group, said: “We take very seriously our commitment to aggressively manage meeting costs. Our success in enlisting product sponsors to pay for the vast majority of conference costs, while charging financial planners a registration fee and for their travel, has resulted in minimal cost to AIG. In turn, our financial planners benefit from strong educational and training content and the ability to earn Continuing Education (CE) credits.”