October 9, 2008 -- Battered by outrage over the $440,000 it spent on a luxury retreat less than a week after the federal government loaned it $85 billion dollars, the giant AIG Insurance Company says it has called off plans to hold a second retreat next week at the exclusive Ritz-Carlton Resort in Half Moon Bay, California.
The Ritz-Carlton outing, like the earlier one, was to reward top independent insurance agents, which the company called a "standard industry practice."
"I am somewhat relieved to hear that AIG has canceled their Ritz-Carlton conference, which was nothing less than a slap in the face of the American people," said Rep. Elijah Cummings (D-MD). "I cannot fathom how in the same day—the very same day—that AIG asked the government for another $37.8 billion loan, the company would even consider moving forward with plans to host another large conference at another luxury resort."
Critics from President Bush's spokesperson to Senator Obama have denounced AIG for holding an expensive retreat at a time of economic crisis. The criticism has been "demoralizing" within AIG said Nicholas Ashooh, a spokesperson for AIG, "but we have to recognize that we're in a different environment and we have to adjust to that.
AIG says it has instructed its worldwide managers to re-scrutinize how money is being spent. "We're certainly reviewing all our expenditures in light of financial circumstances and the fact that taxpayer dollars are helping to support AIG as we get through this difficult credit crisis," said Ashooh.
Despite calling off the Half Moon Bay event, AIG says it will still have to pay for cancellation fees. While the company would not specify how much money would be lost, a standard room at the Ritz Carlton, Half Moon Bay costs over $400 a night.
"We'll certainly lose some money in cancellation fees, but it's just beyond the point of trying to conduct these meetings given the uncertainty that's taking place," said Ashooh.