NEW YORK (Bloomberg) — American International Group Inc. chief executive officer Edward Liddy may face a congressional hearing to explain "the full extent" of the insurer's plan to give bonuses to as many as 7,000 people so they won't quit.

Liddy should testify under oath on why retention payments are going to thousands more people than first disclosed, according to a letter today from Representative Elijah Cummings of the House Committee on Oversight and Government Reform. He cited a Bloomberg News report that says AIG will give as much as a year's pay to about 10 percent of the staff at units that are being sold. Recipients were told to keep the awards secret.

Hearings may put new pressure on AIG to detail why managers will get as much as $4 million after the company accepted a taxpayer-funded bailout now valued at about $150 billion and promised to curtail pay. Cummings is asking AIG to tell Congress the scope of its retention efforts, originally described as covering only 130 executives.

"It is critical that the committee seek to understand whether AIG has revealed the full extent of its compensation policies," wrote Cummings, a Maryland Democrat.

Federal Reserve and US Treasury officials should also testify about whether they knew the extent of AIG's retention payments, Cummings said in the letter to Representative Edolphus Towns, who takes over as chairman of the oversight committee next month. The US received a stake of almost 80 percent in AIG in return for a package of loans and guarantees.

Cummings has criticised the retention pay, calling it unnecessary, and has called for Liddy to resign, saying AIG misled taxpayers. AIG spokesman Joe Norton had no immediate comment. Shrita Sterlin, a spokeswoman for Towns, didn't immediately respond to a request for comment.

The retention payments for 130 people were approved two days after AIG's September 16 bailout, and were disclosed in a September 26 federal filing. AIG said the biggest award was $3 million, without saying how large the rest might be. Liddy's December 5 letter to Cummings said the number of people getting payments was 168, and that the top payment will actually be $4 million.

As many as 7,000 people may get awards that could double their annual pay, a person familiar with the matter said last week. Company documents referred to the payments as bonuses. AIG confirmed at least 2,000 people are included, and has said the payments aren't the same as bonuses and come from a different programme than the one for top executives.

An AIG contract said employees would forfeit future payments if they revealed the awards. Liddy's letter said all efforts tied to the retention program "have been made in the light of day".

Lawmakers, including Cummings, have pressed companies that received taxpayer-funded bailouts to curtail bonuses. AIG said on November 25 that bonuses for seven top executives and pay increases for the next 50 would be scrapped.

Liddy, 62, told Cummings in his letter that taxpayers will benefit from AIG's executive-retention programme. Subsidiaries are being sold so AIG can repay "every penny" supplied by taxpayers, Liddy said, and keeping the managers in place will bolster the value of those units.

The company also justified the payments by saying managers lost their life's savings in the aftermath of AIG's collapse.

Representative Brad Sherman, a California Democrat, asked during a hearing this month whether AIG's retention payments are appropriate for executives who "are part of the team that ran the company into the ground". AIG posted four straight quarterly losses totaling about $43 billion tied to losses on credit-default swaps, contracts protecting against losses on mortgage bonds, and other bets on US housing.

Assistant Treasury Secretary Neel Kashkari, who supervises the US financial rescue programme, has called some of AIG's bonuses "excessive for a failing institution".

Nicholas Ashooh, an AIG spokesman, said December 12 that heads of life insurance businesses were authorised to give retention awards to as many as 10 percent of about 37,000 employees, and they selected "closer to seven or eight percent". Other units may also have retention programs, Ashooh said. He declined to name them.

"It's not a senior executive programme, it's for the employees running the businesses day to day around the world," Ashooh said on December 12. The insurer has about 70,000 employees at the units put up for sale, which include insurance and retirement services and a plane-leasing company.

"If it's so good, why are they keeping it a secret," said Sherman in an interview yesterday. "Some of those people are going to take the bonus and run, and most of them are going to stay whether they get some sort of payment or not. In case you haven't noticed, there's a surplus supply of people working in the financial-services industry these days."

US finance companies cut 220,506 jobs this year through November, placement firm Challenger Grey & Christmas Inc. said in a December 3 report.

In one instance, an AIG manager of an overseas unit told his superior that the payments weren't needed because employees were unlikely to leave, said the person familiar with the matter, who declined to be named because the plan was labelled confidential. The manager was overruled, said the person.

Lawmakers lambasted Liddy's predecessors Martin Sullivan and Robert Willumstad at an October 7 hearing over executive pay and money spent to send salespeople to resorts. The insurer cancelled about 160 events costing a total of $80 million after the hearings.