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Greenberg seeking damages

Determined: Maurice "Hank" Greenberg speaks during a Bloomberg Television interview in New York yesterday

NEW YORK (Bloomberg) — Maurice “Hank” Greenberg said that his partial victory in a lawsuit tied to American International Group’s bailout isn’t enough, and that he’s seeking financial damages to hold the government accountable.

“Our Constitution is a sacred document,” the former chief executive officer of AIG said yesterday in an interview. “Without the Constitution, what are we? What’s the future of the country if the government can overstep its bounds?”

Greenberg is appealing a federal court ruling that his Starr International Co isn’t entitled to compensation tied to the 2008 bailout of AIG. US Court of Claims Judge Thomas Wheeler ruled June 15 that the terms of the rescue were illegally onerous, a victory for Greenberg and Starr’s lead lawyer, David Boies.

Starr, an AIG investor, sued the US in November 2011, claiming the government violated the Constitution by insisting on 80 per cent of the insurer’s stock. Greenberg had sought as much as $40 billion in damages for shareholders.

AIG repaid the bailout in 2012, leaving the government with a profit of about $22.7 billion. Wheeler ruled that Greenberg shouldn’t get damages because AIG would have probably filed for bankruptcy if not for the rescue, leaving shareholders worse off.

“To suggest that you know what a bankruptcy court would do, and what the outcome would be is a little puzzling,” Greenberg said. “How do you know now what the bankruptcy court would do? AIG didn’t have a solvency problem. They had about $80 billion of net worth at the time. That’s a lot of net worth.”

AIG was unable at the time of its rescue to meet its obligations to banks on derivatives tied to sub-prime mortgages. Had the insurer been in bankruptcy, it could have resisted demands from counterparties on the contracts, especially since banks had sold AIG securities that were deceptively pitched as safe investments, he said.

“So why would we respond to a collateral call?” he asked.

Greenberg said he would be entitled to 10 per cent to 12 per cent of the funds in an award. That’s about the size of the AIG stake that he controlled before the bailout, which swelled to $182.3 billion. He said he’s seeking to recover legal fees and plans to donate a portion of proceeds to charity and invest other funds.