March 16, 2009 -- The hot seat is getting even hotter for AIG Chairman and CEO Edward Liddy. Not only has President Barack Obama called on his Treasury Secretary to do everything possible to block the bailed-out insurance company from doling out $165 million in bonuses, but now the New York Attorney General has announced that he will issue subpoenas immediately for the release of the names and job descriptions of those receiving bonuses.
"Taxpayers of this company are now supporting AIG, and they deserve at the very least to know how their money is being spent," wrote Attorney General Andrew Cuomo in a letter he sent to Liddy Monday. "And we owe it to the taxpayers to take every possible action to stop unwarranted bonus payments to those who caused the AIG meltdown in the first place." AIG has received over $170 billion from the government so far.
Cuomo had given AIG until 4pm to turnover the information, and he announced late Monday that AIG failed to meet those demands and that subpoenas would be issued immediately.
"I believe in transparency and disclosure," said Cuomo, "and this is taxpayer money."
"We are in ongoing contact with the Attorney General and will respond appropriately to the subpoena," said AIG spokesperson Christina Pretto.
Liddy has told Treasury Secretary Tim Geithner that the company's "hands are tied" when it comes to distributing the bonuses because of contractual obligations.
Cuomo's letter has asked Liddy to turnover the contracts "you now claim obligate you to make these payments."
"Moreover, you should immediately provide us with a list of who negotiated these contracts and who developed this retention plan so we can begin to investigate the circumstances surrounding these questionable bonus arrangements," said Cuomo.
Cuomo said late Monday that "a lot has happened" since those contracts were signed.
"One could argue that if the taxpayers hadn't bailed out AIG then those contracts wouldn't be worth the paper they were printed on," said Cuomo.
Cuomo's letter in particular refers to AIG's plan to award millions of dollars in bonuses to members of the Financial Products subsidiary.
"Financial Products was, of course, the division of AIG that led to its meltdown and the huge infusion of taxpayers funds to save the firm," wrote Cuomo. "Previously, AIG had agreed at our request to make no payments out of its $600 million Financial Products deferred compensation pool."
Cuomo has led the crusade against bailed-out companies continued use of bonuses since last fall. He has said he is investigating all of AIG's finances back to January 2007.
The War Over Executive Compensation
Cuomo is also seeking the names and compensation information of those at Merrill Lynch who received bonuses shortly before the firm merged with Bank of America. In that case, Cuomo has accused Bank of America of undermining his authority, interfering with his investigation and attempting to influence the government's witnesses, according to court documents.
Bank of America has argued that releasing the names and numbers to the public would be detrimental to the company.
"Bank of America has cooperated with the attorney general's investigation into Merrill Lynch bonuses and will continue to do so," spokesman Scott Silvestri said in a statement. "Regarding the bonus information requested, Bank of America has continually offered to provide that information subject to reasonable confidentiality."
Cuomo's office said that the bank has not demonstrated that it had ever "treated the information in a confidential manner."
A ruling is expected later this week on whether or not the company will have to turn over the information.