The CEO of the giant AIG Insurance Company, Edward Liddy, today defended spending $440,000 on a retreat at a luxurious California resort as "standard practice in our industry" because it rewarded independent insurance agents who were top performers for the company. The event, at the St. Regis Resort and Spa at Monarch Beach, California was held less than a week after the federal government saved AIG from bankruptcy with $85 billion in loans.
Members of Congress complained that AIG executives "were getting pedicures, manicures and massages" at the expense of American taxpayers, suffering from the financial crisis caused by AIG. Resort bills obtained by Congress showed AIG spent $23,000 on charges from the spa and salon.
In a letter to Treasury Secretary Henry Paulson, obtained by ABC News, Liddy said "not a single corporate executive from AIG headquarters attended." According to Liddy, only 10 of the 100 guests at the retreat worked for AIG.
Rep. Henry Waxman (D-CA), who chaired yestersay's hearing on AIG, was not impressed with Liddy's letter to Secretary Paulson. Waxman told ABC News that, "It defies common sense to spend over $400,000 at an exclusive resort a week after the government bailed out AIG. It shows a reckless disregard for the shareholders, who are now the U.S. taxpayers."
But according Liddy, the trip was a standard business expense.
"It's very much accepted practice in the insurance business, especially to reward high-performing individual agents," said AIG spokesperson Nicholas Ashooh. "It's still painful and it's been very distressing to our employees."
In his letter, Liddy said he could understand why the trip would look questionable given the current economic climate.
"We understand that our company is now facing very different challenges - and that we owe our employees and the American public new standards and approaches," Liddy wrote.
He did not offer any apology for the expense. Liddy was named as CEO of AIG during the same week that the spa retreat was held.