AIG struggling to prove case against Greenberg

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29 June 2009

The judge presiding over AIG’s $US4.3 billion ($5.3 billion) lawsuit involving former CEO Maurice “Hank” Greenberg has suggested the company’s case will fail unless lawyers produce better evidence.

US District Court Judge Jed Rakoff last week told lawyers that evidence tendered to the court was unlikely to support allegations Mr Greenberg raised $US4.3 billion from a company retirement fund.

There is little written evidence of an alleged executive compensation plan, with AIG lawyers relying on oral testimony including video evidence.

AIG has sued Starr International alleging it had a fiduciary duty to use acquired AIG stock to fund a deferred employee compensation plan established around 1970.

Instead Starr retained the shares, selling a large proportion. Starr International was set up as an investment vehicle for senior AIG executives, but was taken over by Mr Greenberg and six other former executives following his departure from AIG amid an accounting scandal in 2005.

Mr Greenberg earlier testified that the companies mutually agreed to suspend the compensation plan in 2005 and appoint a charitable trust as beneficiary.