Greenberg’s firm to sue US Govt for $25 billion
Maurice (Hank) Greenberg’s company Starr International Co is suing the US Government for $25 billion on the grounds that the US Government takeover of American International Group was unconstitutional.
AIG has had a presence in Bermuda for more than 40 years and Starr also has an operating unit on the Island.
In its complaint, filed today, Starr said that in bailing out AIG and taking a nearly 80 percent stake, the government failed to compensate existing shareholders. It said this violated the Fifth Amendment, which bars the taking of private property for public use without just compensation.
Mr Greenberg stepped down as CEO of AIG in 2005 after 37 years in the hot seat.
“The government’s actions were ostensibly designed to protect the United States economy and rescue the country’s financial system,” Starr said. “Although this might be a laudable goal, as a matter of basic law, the ends could not and did not justify the unlawful means employed.”
The United States, it went on, “is not empowered to trample shareholder and property rights even in the midst of a financial emergency.”
Monday’s lawsuit was filed with the US Court of Federal Claims in Washington, DC, which handles lawsuits seeking money from the government.
The $25 billion estimate reflects what Starr called the value of the government’s stake on January 14, 2011, when it swapped AIG preferred stock for 562.9 million common shares.
Once the world’s largest insurer by market value, AIG accepted $182.3 billion of federal bailouts beginning on September 16, 2008, amid a liquidity crisis spurred by its exposure to risky debt through credit default swaps.
The government’s stake in AIG has fallen to about 77 percent. AIG itself has sued Bank of America Corp for $10 billion over alleged losses on mortgage securities.