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Greenberg firm cleared of theft
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14:22, July 09, 2009

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NEW YORK: A company run by former AIG CEO Maurice "Hank" Greenberg did not plunder billions from a retirement fund, a jury ruled, dashing the bailed-out insurer's chances of collecting $4.3 billion in damages.

American International Group Inc took Starr International Co, a private company run by Greenberg, to court in an effort to recover millions of shares held by Starr and get compensation for stock sold.

Tuesday's decision is the latest blow for AIG as it struggles to repay $83 billion in loans from the federal government.

AIG had sought to establish that there was the creation of an oral trust in 1970, entrusting Starr International to use a block of AIG shares acquired in a company restructuring to fund an executive retirement scheme for generations of AIG employees. It charged Starr with breach of that trust, and with a second claim of conversion related to sales of the stock for the company's own use.

A final decision on the breach of trust claim will be made by the court by next month.

David Boies, the lawyer for Greenberg and Starr International, said "the quickness of the (jury's) decision reflects the simplicity of the case. The trust AIG is alleging, no one had ever heard of or seen. No document mentioned it and I think the jury recognized that".

Boies added he was "hopeful the judge would see it the same way as the jury does".

A spokeswoman for Greenberg said the decision was a "complete vindication of Starr International and Mr Greenberg".

Greenberg, 84, was forced out of AIG in 2005 after 38 years as CEO for failure to cooperate with an internal investigation into accounting practices at the insurer that once claimed global dominance.

Powerful decision

While the final decision in the breach of trust claim will be made by the court, the conversion claim was decided by the jury, meaning that there will be no damages awarded to AIG.

Greenberg, who took the stand for several days early in the three-week trial heard in US District Court in Manhattan, and sat through much of the proceedings, was not present in court for the jury's verdict.

The final decision by Judge Jed Rakoff is expected by next month. Rakoff said in court on Tuesday he would take the jury's determination "very seriously" in coming to his own decision.

AIG and privately held Starr International, often referred to as SICO, were closely aligned until Greenberg left AIG in 2005.

He kept control of Starr and its large block of AIG shares, worth in excess of $23 billion at the time. Over time, Greenberg sold some of the stock and started investing in businesses that have at times competed against his former company.

The retirement fund was cut off within days of Greenberg's ouster from AIG in 2005, ending a lucrative plan that had enriched hundreds of senior managers for 35 years.

AIG said in a statement after the jury announced its verdict that it was "disappointed".

Source:China Daily/Agencies



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