(Bloomberg) ? Shareholders of American International Group Inc., the world?s largest insurer, sued directors on behalf of the company, claiming the board failed to prevent illegal bid rigging.

American International was mentioned as a participant in a phony bidding system in a civil suit New York Attorney General Eliot Spitzer filed October 14 against Marsh & McLennan Cos., the world?s largest insurance broker. Spitzer hasn?t sued American International. Spitzer?s complaint against Marsh, filed in state court in New York, says Marsh sought fake bids to make corporate clients believe insurers were competing for their business. According to the complaint, Marsh actually picked winners based on which insurer paid it the most in contingency commissions.

?AIG damaged its reputation for honesty, thereby damaging its relationships with its current customers because it cheated its clients by rigging bids,? shareholder Jerome Kaplan said in one of two shareholder complaints filed last week in state Chancery Court in Wilmington, Delaware. Kaplan said in his October 22 complaint that directors breached fiduciary duties by failing to implement and maintain ?adequate internal controls? and failing to ensure American International ?operated in compliance with all applicable federal and state laws.?