11 who got $1M bonuses no longer with AIG
WASHINGTON -- Insurance giant American International Group paid bonuses of $1 million or more to each of 73 employees, including 11 who no longer work for the company, New York Attorney General Andrew Cuomo said Tuesday.
Meanwhile, talking tougher by the hour, congressional Democrats confronted AIG with an ultimatum Tuesday: Give back $165 million in post-bailout bonuses or watch Congress tax it away with emergency legislation.
Congressional leaders directed three powerful committees to come up with legislation this week to authorize Attorney General Eric Holder to recover massive bonus payments made by companies like the ones paid last week by AIG.
Contracts written last March guaranteed employees 100% of their 2007 bonus amounts for 2008, "despite obvious signs that 2008 performance would be disastrous in comparison to the year before," Cuomo said.
President Obama and Washington lawmakers have blasted AIG for paying more than $160 million in bonuses to employees of its Financial Products division, the unit primarily responsible for the meltdown that led to a federal bailout of the company, while the company has received billions in taxpayer bailout funds.
Treasury Secretary Timothy Geithner says he is working with the Justice Department to determine whether any retention bonuses paid by American International Group can be recovered.
The insurance giant has received about $170 billion in government bailout funds. It paid $165 million in retention awards on Friday.
Geithner has authority under the recently passed economic stimulus bill to review compensation paid to senior executives and to the next 20 most highly compensated employees of companies that have received federal assistance.
He disclosed the review of AIG bonuses in letters to congressional leaders Tuesday evening.
Cuomo said AIG mailed the bonus checks Friday.
The company and some federal regulators have said it was obligated by contract to make the payments. Cuomo said the bonuses might have been fraudulent if AIG officials knew the company couldn't afford them.
Cuomo said that despite their contracts, Financial Products employees agreed to take 2009 salaries of $1 in exchange for receiving their retention bonus packages.
"You could argue if the taxpayers didn't bail out AIG, those contracts wouldn't be worth the paper it's printed on," he said Monday.
There was no immediate AIG comment following Cuomo's disclosure Tuesday of the bonus amounts. Cuomo did not release the names of the recipients.
AIG spokeswoman Christina Pretto had said Monday the company was in contact with Cuomo's office and would respond to his requests for information and the subpoena.
In a letter Tuesday to Rep. Barney Frank, chairman of the House Committee on Financial Services, Cuomo outlined the bonus and contract information and asked the panel to take up the issue at a hearing scheduled for Wednesday.
According to the attorney general's office, the top individual bonus was more than $6.4 million, and the top seven received more than $4 million each.
AIG has received about $170 billion in federal bailout money over the last year.
In Congress:
• Senate Majority Leader Harry Reid said the tax-writing Senate Finance Committee will issue a proposal in the next day or so that would require AIG to return to the government at least a portion of the bonuses paid out last week.
• Sen. Charles Schumer, D-N.Y., proposed legislation Tuesday. "This is disgraceful, this is unacceptable and this is an offense to millions of hard working Americans whose tax dollars are the only reason AIG continues to exist," Schumer, speaking on the Senate floor, said of the bonuses. "We intend to do everything in our power to prevent those payments from being paid and recoup the money that has already been paid."
Schumer said he wrote a letter to AIG chief Edward Liddy urging him to tell his employees to voluntarily return the bonus money. Otherwise, Schumer said, Congress will pass legislation that would tax the bonus money at such a high rate that the AIG employees will be forced to pay it back through taxes.
"If you don't return it on your own we will do it for you," Schumer said.
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