Ex-Marsh Execs Say Firm Made Them ‘Scapegoats’

NU Online News Service, June 28, 2:47 p.m. EDT

Two ex-Marsh executives are accusing their former employer of making them “scapegoats” to avoid criminal prosecution by colluding with the New York attorney general to have the two indicted over allegations they engaged in an improper kickback scheme.

Former Marsh executives William Gilman and Edward J. McNenney Jr. filed an amended complaint with the U.S. District Court Southern District of New York. The two men filed their original suit in 2010.

The suit says that the insurance brokerage firm Marsh, a subsidiary of Marsh & McLennan Cos., colluded with the attorney general to avoid criminal indictment and instead be subject to civil penalty.

The company ultimately paid a penalty of $850 million in 2005 after allegations were made by then-New York Attorney General Eliot Spitzer that executives engaged in steering certain accounts in Marsh's global broking practice to insurers that paid lucrative contingent commission fees. The broker was also banned from accepting contingent commissions until 2010.

The suit charges that Spitzer negotiated to have his good friend Michael Cherkasky named chief executive officer after the resignation of then-CEO Jeff Greenberg in late 2004.

The suit says Spitzer engaged in the collusion in an effort to “bolster his crime-fighting credentials,” as he sought the Democratic nomination for governor of New York in 2006.

Gilman and McNenney contend that the engagement in contingent commissions was perfectly legal and that they cooperated in all internal investigations without hesitation. Both were fired from their jobs without cause, the suit contends, and Gilman was “unfairly denied” his eligible retirement.

Both men were also denied severance pay they were entitled to, the suit contends, noting that others who were released for their involvement in the alleged scheme did receive severance.

In 2005, eight executives from Marsh were indicted on fraud and larceny charges, including Gilman and McNenney.

A spokesman for Marsh & McLennan Cos. declined to comment on the particulars of the case, but issued a statement saying, “The decision to prosecute William Gilman and Edward McNenney was made by the former New York attorney general and a grand jury; not by Marsh.”

The charges against the two men were eventually dropped after their conviction in 2008. The convictions were subsequently vacated in 2010 on the withholding of evidence that the judge said could have impacted the verdict.

The attorney general's office formerly withdrew the charges in 2011.