Ex-AIG execs to pay $16.5m
THE FORMER chief executive of AIG, Maurice “Hank” Greenberg has agreed to pay $15m (£9m) to settle government allegations that he cooked the books to inflate the stricken insurer’s earnings.
AIG’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’s involvement in accounting transactions that artificially boosted the insurer’s financial results between 2000 and 2005.
Greenberg and Smith, who both left AIG in 2005 amid the accounting scandal, agreed to settle the charges without admitting or denying the SEC’s findings.
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.
Greenberg said yesterday he did not admit any of the SEC’s claims except that he was the boss of AIG “at the time of the accounting issue”.
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 “move forward with his life without the added legal costs and distraction of this lawsuit”.
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.
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.