AIG Has Not Paid Bonuses, Treasury Nominee Says

NU Online News Service, July 23, 2:45 p.m. EDT

Troubled insurance carrier American International Group has not paid $2.4 million in bonuses to executives after being denied approval from the U.S. Treasury Department, a department nominee said.

In answer to questions posed by Sen. Charles E. Grassley, R-Iowa, ranking member of the Committee on Finance, George Madison, nominated to be general counsel for the Department of Treasury, said he was advised by the department that AIG did not make any of the bonus payments scheduled to be paid on or around July 15.

The questions and answers were posted on the committee's Senate Web site.

Mr. Madison went on to say that the department did not approve the payments to senior executives.

According to reports, AIG was seeking to pay the bonuses to 43 executives that it said it is obligated to pay.

Financially troubled AIG has received around $180 billion in government loans and credits after it ran into trouble covering losses from its credit default swap obligations.

When asked by Sen. Grassley about Compensation Special Master Kenneth Feinberg's review of the bonus payments, Mr. Madison replied that Mr. Feinberg is required to review certain payments and their structure "for the executive officers and the top 100 most highly compensated employees of all recipients of exceptional TARP (Trouble Asset Relief Program) assistance, including AIG."

Mr. Feinberg is not required to approve the payments, said Mr. Madison, but he can issue an advisory opinion "at his discretion," He added that Mr. Feinberg has not done so.

AIG has been greatly criticized over bonus payments, after shelling out $165 million in March to executives of the financial products unit–which was blamed for bringing the company close to failure.

Rep. Elijah E. Cummings, D-Md., who has been a vocal critic of the AIG bailout, said on July 10, when this round of bonus payments came to light, that, "If AIG doesn't have the money to survive on its own, it doesn't have the money to dole out large bonuses to its executives."

An AIG spokeswoman said the company declined to comment.