HARTFORD (Bloomberg) — Jurors at the fraud trial of four former General Reinsurance Corp. executives can hear a taped conversation in which a witness said American International Group Inc. will "find ways to cook the books," a US judge ruled.

Prosecutors may play tapes at the criminal trial of former General Re chief executive officer Ronald Ferguson, three of his former colleagues, and Christian Milton, the former head of reinsurance at AIG, the judge ruled Oct. 30. The five are accused of using a sham reinsurance contract to inflate AIG's reported reserves for claims by $500 million.

One tape involves a conversation on November 14, 2000, between one defendant, former General Re Chief Financial Officer Elizabeth Monrad, and John Houldsworth, a company executive who pleaded guilty and agreed to be a prosecution witness. US District Judge Christopher Droney denied a bid by defendants to bar portions of that tape. General Re is a unit of Warren Buffett's Berkshire Hathaway Inc.

Houldsworth tells Monrad "if there's enough pressure on" at AIG, the world's largest insurer, "they'll find ways to cook the books, won't they," according to the October 30 opinion by Droney in Hartford, Connecticut. Houldsworth also said "we won't help them do that too much" and "we'll do nothing illegal", to which Monrad replies "right", the judge wrote.

Droney's opinion allows prosecutors to use seven taped conversations, denied use of an eighth, and deferred a decision on a ninth. The defendants opposed all of them, arguing they were irrelevant, prejudicial, or inadmissible hearsay.

Jury selection is scheduled for December 3 and opening arguments are set for Jan. 7 in the trial of Ferguson, Monrad and Milton. The other defendants are Christopher Garand, a former senior vice president in charge of finite reinsurance, and Robert Graham, former assistant general counsel.

AIG was run by former CEO Maurice (Hank) Greenberg, who resigned amid accounting probes.

Droney's ruling also allows jurors to hear another Houldsworth conversation on November 14, 2000, in which he discussed a reinsurance transaction with Garand.

On the tape, Houldsworth said Monrad told him Greenberg sought the transaction because AIG "just wanted to be able to book $500 million of reserves" to avoid negative reaction from stock analysts, Droney wrote.

The conversation would help jurors understand "AIG's motives and Garand's knowledge of these motives at the beginning stages of the transaction," the judge wrote.