Ex-AIG execs to pay $16.5m

THE FORMER chief executive of AIG, Maurice &ldquo;Hank&rdquo; Greenberg has agreed to pay $15m (&pound;9m) to settle government allegations that he cooked the books to inflate the stricken insurer&rsquo;s earnings.<br /><br />AIG&rsquo;s former chief financial officer Howard Smith has also agreed to pay $1.5m to settle Securities and Exchange Commission (SEC) charges relating to his and Greenberg&rsquo;s involvement in accounting transactions that artificially boosted the insurer&rsquo;s financial results between 2000 and 2005.<br /><br />Greenberg and Smith, who both left AIG in 2005 amid the accounting scandal, agreed to settle the charges without admitting or denying the SEC&rsquo;s findings.<br /><br />Greenberg was forced to resign from AIG after 38 years at the helm because he refused to cooperate with an internal investigation into accounting practices.<br /><br />Greenberg said yesterday he did not admit any of the SEC&rsquo;s claims except that he was the boss of AIG &ldquo;at the time of the accounting issue&rdquo;.<br /><br />Smith said, in a statement issued by his lawyer, that he was initially inclined to fight the allegations but decided to settle the matter, enabling him to &ldquo;move forward with his life without the added legal costs and distraction of this lawsuit&rdquo;.<br /><br />According to the SEC, Greenberg and Smith were responsible for material misstatements that helped AIG falsely report financial results that consistently met or exceeded key earnings and growth targets.<br /><br />The SEC charged AIG in 2006 with securities fraud and improper accounting. The company settled the charges by paying disgorgement of $700m and a penalty of $100m.