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Greenberg sues AIG to get copies of board notes, minutes

DOVER, Delaware ? The former CEO of American International Group Inc., Maurice ?Hank? Greenberg, filed a lawsuit yesterday seeking records associated with the company?s $1.6 billion settlement of allegations that it engaged in deceptive accounting practices.

Starr International Co., a private company led by Greenberg, alleges in the Chancery Court filing that AIG is violating Delaware law by refusing to allow representatives of Starr, which is AIG?s largest shareholder, to inspect the company?s books and records.

Starr is seeking minutes, notes, transcripts and any other records relating to AIG board and committee meetings dating from February 9, 2005 to the present.

Starr alleges that AIG responded to a June 9 demand letter by offering only heavily redacted ?nonprivileged minutes? of board and audit committee meetings relating only to worker?s compensation payments made in connection with the settlement announced on February 9 of this year.

In the settlement, AIG, one of the world?s largest insurance companies, agreed to pay $1.64 billion to settle allegations by New York Attorney General Eliot Spitzer that the company used deceptive accounting practices to mislead investors and regulatory agencies. The Securities and Exchange Commission filed and settled allegations of accounting fraud with the company simultaneously.

The settlement did not cover Greenberg, who was named in the suit but vowed to fight it in court.

Under the settlement, AIG agreed to pay $800 million for investors allegedly deceived by AIG?s accounting tactics, including a $100 million penalty to the SEC. The company also agreed to pay $375 million to policyholders, $344 million to states harmed by practices from 1986 to 1995 involving state workers? compensation funds, and fines of $100 million to the state of New York and $25 million to the US Justice Department.

In the demand letter seeking access to AIG records and in the complaint filed yesterday, Starr claims that at least three states slated to receive worker?s compensation payments have admitted that they are not entitled to receive such payments.

The complaint also alleges that other states have expressed ?serious misgivings? about the workers? compensation payments. Minnesota, for example, filed a separate lawsuit against AIG rather than accept a settlement state officials believed to be inadequate.

?The stockholder believes that the above issues may be indicative of other problems with the settlement and corresponding possible mismanagement of the company,? the Chancery Court complaint reads.

Greenberg was ousted in March 2005 and says he followed proper accounting procedures during his 38 years leading the company. Through a spokesman, Greenberg declined to comment on yesterday?s court filing.

AIG spokesman Joe Norton did not immediately return a call seeking comment.