(Bloomberg) ? Maurice Greenberg, the ousted chief executive of American International Group Inc., contested the insurer?s $3.9 billion profit restatement, telling investigators that much of it was unnecessary and driven by fear.

In a memo to US regulators, Greenberg?s attorneys said AIG and PricewaterhouseCoopers LLP, its auditor, had the relevant information before the corrections were made and changed rules ?retroactively.?

Accounting adjustments by senior managers were never done without the auditor?s knowledge and involved many people, including in some instances Greenberg?s replacement, Martin Sullivan, the memo said.

?AIG?s rush to concede wrongdoing may be explained in part by the current regulatory environment,? said the memo, which Greenberg?s lawyers supplied to reporters today. ?Many of the restatement items appear to be exaggerated and unnecessary.?

Greenberg, 80, is trying to discredit the restatement as he and AIG face probes by the Securities and Exchange Commission and Justice Department and a fraud lawsuit from New York Attorney General Eliot Spitzer. The company blamed former managers for skirting internal controls to alter its books, lowering net income from the past five years by 10 percent to correct reinsurance contracts and other transactions that hid liabilities and inflated underwriting income.

?The rush to judgment may also be explained in part by the outside directors? interest in legitimising their removal of Mr. Greenberg,? the memo said.

AIG spokesman Chris Winans said the company stands by its decisions and hadn?t been given access to the report. Steven Silber, a spokesman for PricewaterhouseCoopers, said the firm hadn?t seen the report and couldn?t comment.

Greenberg denied he engaged in any fraudulent transactions and pointed to grey areas in accounting rules for so-called finite policies, a non-traditional type of reinsurance that plays on the boundary between finance and insurance.

?The rules or industry standards on which these accounting and actuarial judgments were based were not clear, are evolving, and are still not clear to this day,? the memo said.

The memo also said AIG was wrong to assume liabilities that had previously been recorded as part of Union Excess Reinsurance Co. and warned that Starr International Co., a private company that he still controls, may move to absorb the offshore reinsurer.

AIG said Barbados-based Union Excess was effectively controlled by AIG and reinsurance transactions between the two improperly allowed AIG to reduce its reported losses. The correction lowered AIG?s shareholders? equity by $951 million.

PricewaterhouseCoopers never expressed concerns about AIG?s accounting when Greenberg was in control, the memo said. The two companies worked closely together, it said, citing five AIG executives, including Chief Financial Officer Steven Bensinger and Comptroller David Herzog, who were previously employed by the accounting firm. Howard Opinsky, a spokesman for Greenberg?s attorneys, said the memo was submitted to federal regulators last week, declining to specify which ones.

SEC spokesman John Nester declined to comment and Justice Department spokesman Bryan Sierra didn?t return a phone call seeking comment.