A jury has ruled in favor of a company run by former AIG CEO Hank Greenberg, finding that Starr International Co. did not plunder billions from a retirement fund. This killed the bailed-out insurer’s chances of collecting $4.3 billion in damages. American International Group Inc. sued Starr, a private company run by Greenberg, in an effort to recover millions of shares held by Starr and to get compensation for stock sold. This verdict is the latest blow for AIG as it struggles to repay $83 billion in loans from the federal government.
AIG had sought to establish that there had been an oral trust created in 1970, entrusting Starr International to use a block of AIG shares acquired in a company restructuring to fund an executive retirement scheme for generations of AIG employees. The suit charged Starr with breach of that trust, and with a second claim of conversion related to sales of the stock for the company’s own use. The jury returned their verdict after about only five hours of deliberation, ruling that Starr was not liable on the two claims. But a final decision on the breach of trust claim will be made by the trial judge at a later date.
David Boies was the lawyer who represented Greenberg and Starr International. After the verdict, David said:
The quickness of the (jury’s) decision reflects the simplicity of the case. The trust AIG is alleging, no one had ever heard of or seen. No document mentioned it and I think the jury recognized that. I am hopeful the judge would see it the same way as the jury does.
Hank Greenberg, who is now 84, was forced out of AIG in 2005 after 38 years as CEO for failure to cooperate with an internal investigation into accounting practices at the insurer that once claimed global dominance. There are a number of lawsuits still pending between Greenberg, or companies he controls, and AIG, stemming from the parties’ 2005 break-up. Greenberg also continues to face civil charges of fraud brought by then New York Attorney General Eliot Spitzer in 2005 related to complex reinsurance transactions at the insurer.
Source: Insurance Journal
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