Three Bermuda-based AIG legal staff, who had worked with the company?s fired legal counsel, have quit their jobs because of concerns about a regulatory investigation probing AIG?s ties to offshore entities.

The resignations this week followed AIG?s senior executive and Bermuda-based legal counsel Michael Murphy being fired after 32 years with the company ? a decision made at AIG?s head office in New York on Sunday. He was let go for ?failure to cooperate with governmental and regulatory enquiries?.

The three staff worked with Mr. Murphy and quit their jobs because of concerns to do with the ongoing investigation, George Cubbon, CEO of AIG?s Bermuda operations told yesterday.

The development was thought to reduce staffing in AIG?s Bermuda legal office by about 50 percent, with Mr. Murphy previously having about six staff in that department.

Reports reaching this newsroom earlier this week were that Mr. Murphy removed, and possibly destroyed, documents from the company?s Richmond Road headquarters, but questions put to the company on the matter earlier this week and again yesterday were greeted by a ?no comment?.

The Wall Street Street Journal reported yesterday that a lawyer in Bermuda had been carting boxes of documents out of an AIG office on Friday, and into a van.

Mr. Cubbon would not be drawn on whether the lawyer referred to in the Journal report was Mr. Murphy, who in addition to having been legal counsel at AIG?s Bermuda office is known to be a close confidant of ousted CEO Maurice (Hank) Greenberg.

Mr. Greenberg,79, quit the company this week after 37 years of running the global commercial insurance giant with an iron hand.

In the end Mr. Greenberg?s long reign may have been undone by the actions at AIG?s Bermuda office last week.

The Wall Street Journal said that in addition to the boxes of documents that were being taken away from the building, lawyers hired by AIG to handle the regulatory probe discovered records were missing and that an employee had destroyed computer records and tape recordings of business meetings.

Mr. Cubbon did allow to that Mr. Murphy was not the AIG employee who was said to have destroyed the computer records and tape recordings.

Attempts to take away documents that may be needed as part of the investigation led to a tense stand off with New York Attorney General Eliot Spitzer, who, along with the US Securities and Exchange Commission, has been putting the regulatory heat on AIG.

Mr. Greenberg had already, the week before, resigned as CEO but remained chairman. This week he gave that up too, with the Wall Street Journal reporting that Mr. Spitzer was so dismayed by the ?document caper? in Bermuda, that he issued the ultimate threat of his office ? indicting the company on Monday, if action was not taken.

Mr. Greenberg, realising the gravity of the situation ? no financial firm has ever survived a corporate indictment ? handed in his resignation from the board.

In the aftermath of last Friday?s ?document caper?, AIG?s Bermuda operations beefed up security measures in a bid to protect documents.

Mr. Cubbon yesterday told that the head of security for the AIG group is currently on the Island to review ?the appropriateness? of the security steps the Bermuda office took last weekend. Two other AIG security staff from New York are also in Bermuda, he said.

Although it is not known how long the three-person security detail will be on the Island, Mr. Cubbon said ?until this investigation is over, there will be someone available to us to ensure that security is appropriate to the situation AIG finds itself in?.

When asked if there had been any subpoenas from US authorities issued for any former or past Bermuda-based executives of AIG, Mr. Cubbon said: ?To my knowledge, no. I am not aware of any subpoenas issued to anyone with AIG in Bermuda.?

He said he had ?no knowledge? of terms, if any, given to Mr. Murphy when fired.

In addition to being legal counsel, Mr. Murphy also played key roles in several other Bermuda AIG subsidiaries ? but no more.

?His termination related to all AIG and subsidiary companies in Bermuda,? Mr. Cubbon said.

That does not mean that Mr. Murphy?s ties with Starr International Company (SICo) have been severed, however.

SICo is a powerful private holding company that owns approximately 12 percent of AIG?s outstanding shares. It was named for AIG founder, the late C.V. Starr.

Although separate from AIG, the company was set up by AIG management in 1975 as a deferred compensation vehicle for senior executives. At yesterday?s share value, the dollar value of SICo?s shareholding in AIG would have stood at about $15.8 billion.

AIG?s share price has slumped recently, trading yesterday at a two-year low when it hit $50.95.

Mr. Murphy is believed to have had an association with SICo since the early 1990s, holding the influential posts of director and secretary.

One person close to the matter, but who asked not to be named, said Starr was independent from AIG even if only by an ?accounting nicety?.

As for Mr. Murphy?s ties to Starr International, the person said: ?I believe they continue.?