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Greenberg admits to sham reinsurance deals

NEW YORK (Bloomberg) — Maurice “Hank” Greenberg, the former American International Group chief executive officer, lambasted the New York State attorney-general's office after admitting that he approved two reinsurance deals that regulators have called fraudulent.

“AIG is a shadow of what it was, people lost millions of dollars, billions of dollars. Pension funds, the same thing. For what?” Greenberg said on Friday in a phone interview. “So I can pay $9 million?”

Greenberg, 91, built AIG into the world's largest insurer until stepping down in 2005 amid a probe by then-Attorney-General Eliot Spitzer into faulty risk-transfer contracts. The company agreed the next year to pay about $1.6 billion in a settlement with Spitzer and the US Securities and Exchange Commission.

AIG stumbled after Greenberg's departure, nearly collapsing in 2008 on losses tied to subprime mortgages. The company sold many of its prized units to repay a US bailout that swelled to $182.3 billion.

Greenberg has spent years faulting regulators, his successors and others for the decline of AIG. Even after the announcement of the settlement on Friday, he criticised Spitzer for the use of the Martin Act, a law that gives New York prosecutors broad powers to probe white-collar crime.

“To have a law like that in the hands of people not responsible is disgraceful,” Greenberg said. The case “destroyed a great company that was a national asset.”

AIG and Spitzer declined to comment. Greenberg's lawyer, David Boies, said in a statement that Eric Schneiderman, New York's current attorney-general, “has no evidence — none — that Mr Greenberg was aware at the time he approved the two transactions at issue that there was anything improper about them.”

The settlement resolved a bitter court fight in which Greenberg and Boies squared off against three successive state attorneys-general over 11 years.

“Today's agreement settles the indisputable fact that Mr Greenberg has denied for 12 years: that Mr Greenberg orchestrated two transactions that fundamentally misrepresented AIG's finances,” Schneiderman said in a lawsuit.

Greenberg had fought allegations that he used two sham transactions to hide the insurer's true financial condition. The trial began in September, more than 11 years after Spitzer had filed suit.

Settlement: Maurice 'Hank' Greenberg: admitted to sham reinsurance deals at AIG

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Published February 13, 2017 at 8:00 am (Updated February 13, 2017 at 12:21 am)

Greenberg admits to sham reinsurance deals

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