NU Online News Service, March 26, 2:42 p.m. EDT
American International Group said a number of its executives who work outside the United States for its troubled Financial Products unit have returned bonuses that have drawn criticism from U.S. and state officials and two of those executives have resigned.
New York Attorney General Andrew Cuomo, who has been pursuing the issue of $165 million in retention bonuses paid out by the firm after it took billions in U.S. bailout money, said Monday that 15 employees had returned $50 million.
He said at that time he did not believe he had authority over the 53 percent of Financial Products employees who work outside the United States.
AIG said in a statement today that it "deeply appreciates that an [unspecified] number of executives who work for Financial Products in Europe have volunteered to return recent retention payments."
The company said several employees, including Mauro Gabriele, Banque AIG, president and chief executive officer, and Jim Shephard, Banque AIG deputy CEO, offered to return the bonus prior to a request from the company March 18. Bonuses were paid March 15.
It noted that Mr. Shephard and Mr. Gabriele have resigned from their posts "given shared concerns regarding their ability to conduct business in the current hostile environment toward Banque AIG and AIG FP employees generally."
However, AIG said the two executives "are fully committed to ensure that Banque AIG continues to operate normally and meet its obligations in these extraordinary conditions, and, as a result, they remain in their roles and have committed to effect an orderly transition.
"Given their commitment, we believe that the status of the Banque AIG derivatives book will remain unchanged and in good standing."
AIG noted that company CEO Edward Liddy in his March 14 letter to Treasury Secretary Timothy Geithner had warned that "resignations at Banque AIG could raise risks with respect to derivatives written out of Banque AIG, and we are in ongoing discussions with French and U.K. regulators, as well as with the Federal Reserve Bank of New York and the U.S Treasury Department, about this matter."
Finally, the company said that Banque AIG and FP employees "continue to successfully execute precisely the job asked of them: to de-risk and unwind the FP business. To date, they have reduced the trade count from 44,000 to 28,000–nearly 40 percent."
One Financial Products employee who is not returning the money is Jake DeSantis, an executive vice president for the AIG Financial Products' profitable commodities section. Mr. DeSantis in a resignation letter published yesterday in The New York Times said he and most employees of that branch were not involved with the disastrous credit default swaps end of the business.
Instead of having his bonus money "disappear back into the obscurity of AIG's or the federal government's budget," he said he will donate the entire after tax amount to organizations "helping people who are suffering from the global downturn."
AIG did not immediately respond to questions about the total number of employees who have now returned bonuses and the total dollar amount involved.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.