Greenberg Won't Back Down On SICO Testimony

NEW YORK--Maurice R. Greenberg spent his sixth day on the witness stand yesterday sparring with the attorney for American International Group over what restrictions there were on use of AIG stock held by Starr International Company.

Mr. Greenberg, former chairman and chief executive officer of AIG, was forced out in 2005 but remained as chairman of AIG's sister company SICO, which holds a large block of AIG stock that the company is suing to have returned. SICO split from AIG shortly after Mr. Greenberg left the financially troubled conglomerate.

Some of the stock held by SICO had been held in trust to fund bonuses in a deferred compensation program for top AIG employees that was ended when SICO split from AIG.

During continued questioning yesterday in U.S. District Court in Manhattan, AIG attorney Theodore Wells sought to cast doubt over Mr. Greenberg's assertion that if anyone tried to gain access to the assets of SICO's trust, consisting primarily of American International Group stock, it would automatically be liquidated and turned over to the Starr Foundation.

In the case being heard by Judge Jed S. Rakoff, AIG is alleging that SICO is guilty of breach of trust in its handling of the shares used for deferred compensation.

The suit also seeks to force SICO to transfer the AIG shares it holds back to AIG, which were worth a total of $4.3 billion in 2005 when the deferred compensation program with AIG was severed by SICO.

At issue is whether the trust was set up for the benefit of AIG or, as Mr. Greenberg contends, it was set up for charitable purposes.

The pace of yesterday's questioning picked up after Judge Rakoff put both Mr. Wells and SICO's attorney David Boies on the clock in an effort to complete Mr. Greenberg's testimony and keep the trial moving.

As Mr. Wells continued his extended redirect examination of Mr. Greenberg's testimony throughout the afternoon, the insurance executive sometimes appeared annoyed with the questions.

Earlier in the proceedings Mr. Wells had asked Mr. Greenberg to find language in any documents to substantiate his claims concerning the protection of the trust.

Yesterday, Mr. Greenberg said he believed the document that protected the trust was the "Deed of Trust" from the 1970s.

He cited one section that said should the SICO trust be found to be "frustrated, by a court of competent jurisdiction, then the entire trust fund shall be transferred unconditionally to the [charitable] Starr Foundation Inc."

However, Mr. Wells argued that the language does not imply any automatic condition of liquidation and award to the Starr Foundation.

His remarks at one point provoked Mr. Greenberg to respond, "I disagree with that comment one hundred percent."

"If someone was killed, all the others knew what [to do with the trust]," said Mr. Greenberg.

Mr. Wells also introduced a memo from one of the founding shareholders, Ernie Stemple, from 1989 that raised questions about whether "the triggering mechanism" could be counted on in the future to move the trust into the Starr Foundation.

Mr. Greenberg would not relent in his assertion that the trust was always intended for charitable cause.

Earlier in the day, to accommodate a scheduling problem, Carla A. Hills, who served on the board of directors and the audit committee of AIG from 1993 to 2006, testified on behalf of SICO.

She said that AIG was considering expensing the SICO deferred compensation program in 2005, something Mr. Greenberg opposed, and may have ended the awards at that time.

She also revealed that a succession plan had been discussed and Martin Sullivan was chosen to replace Mr. Greenberg when he retired. Mr. Sullivan took over the chief executive job in 2005 when Mr. Greenberg was forced out amidst revelations of AIG accounting improprieties.

Judge Rakoff is aiming to complete Mr. Greenberg's testimony today. The trial, which began last week, is expected to run 30 days.