NEW YORK (AP) — Former American International Group Inc. CEO Maurice (Hank) Greenberg says a retirement bonus fund that AIG is trying to reclaim in federal court was not intended solely for AIG employees.

The insurance giant has accused Greenberg, through a company called Starr International that he controls, of plundering an AIG retirement programme composed of $4.3 billion in stock in 2005.

The questions being raised in court are who ultimately controlled the fund, and what its main purpose was.

AIG called Greenberg to the witness stand early yesterday afternoon in federal court in Manhattan. When AIG's lawyer Theodore Wells asked about the intended purpose of the fund, Greenberg said: "It was not just for AIG employees."

The fund operated by Starr had many other purposes, Greenberg said. One purpose was to allow Starr to control AIG, Greenberg said, and after Greenberg was ousted from his CEO job at AIG, Starr's voting shareholders "lost control."

"They had confidence in me," Greenberg said. Because that control over AIG was lost, Starr acted within its rights in taking over the shares, he asserted.

The fund was "a plan. A plan is not cast in concrete. There had to be certain performance standards," Greenberg said. If those standards were not met, Starr's voting shareholders "had a right to make a change", he said.

Greenberg, 84 years old, built AIG over his 35-year career from a small company into the world's largest insurer. He was ousted as CEO of AIG in 2005 amid investigations of accounting irregularities, but Starr International remained AIG's largest shareholder until the government bailed out AIG last year.

The lawsuit against Greenberg and Starr is a complex one involving a fund that was created during a reorganisation of AIG in 1970 with $110 million worth of stock. It grew to $4.3 billion over nearly four decades.

The fund has been described in several letters and speeches by Greenberg over the years as a retirement bonus fund for current and future employees. Lawyers for Greenberg's firm, however, say it was not clearly described as such by AIG to auditors, shareholders, the Securities and Exchange Commission or insurance regulators.

Even Greenberg acknowledged in a speech several years ago that the fund in question would not be able to be created under current US tax law. Starr International Co., also known as SICO, is a Bermuda-based holding company.

"There is no plan like this in the world," said Greenberg, according to a speech transcript read aloud in court by witness Terri Austin, who is currently the chief diversity officer at AIG.

AIG's lawyer Theodore Wells said on Monday that Greenberg took control of the fund and then sold tens of millions of AIG shares held in it because he was angry about being ousted.

But David Boies, the lawyer representing Starr International, said the stock belonged to Starr. AIG has repeatedly acknowledged in the past that Starr International was the beneficial owner of the stock, he said yesterday, the second day of the trial being held in lower Manhattan.

"They said it internally, they said it externally," he said, showing the jury letters and clips of past testimony from AIG officials.

Furthermore, Boies said, documents show that the trust was not only intended to provide retirement bonuses for AIG employees, but also to finance new projects. The wealth generated, he said, was intended to ultimately go to a charity foundation run by Starr.

It is "wrong" and "outrageous" for AIG to try to grab the shares back from Starr, and Greenberg was not trying to take the stock for himself, Boies said.

"He isn't a bad man," Boies said.