'The Party's Over' for AIG Says Cuomo
The NY Attorney General is investigating the company's expenditures.
October 15, 2008— -- "The party's over" for AIG said the Attorney General of New York Andrew Cuomo, who announced today that he is investigating all of company's expenses since January 2007.
Cuomo added that while AIG has been funding "outrageous" expenditures, such as corporate spa retreats and hunting trips, the "taxpayers have the hangover" from their parties.
AIG has been in the hot seat since a few days after the federal government committed $85 billion to bailout the company, when it was revealed that the company spent $440,000 for a week-long retreat at a luxury resort and spa.
Still battered by that outrage, AIG later called off plans to hold a second retreat at the exclusive Ritz-Carlton Resort in Half Moon Bay, California. It was reported today in the "New York Daily News" that AIG executives spent $86,000 on a partridge hunt in the English countryside the same week that AIG got a second bailout loan of $37.5 billion.
Cuomo's office sent a cease and desist letter to AIG, ordering them not to use taxpayer funds to take any more trips. Click here to see Cuomo's letter to AIG.
Additionally, Cuomo will "review, rescind, and recover all past unreasonable expenditures" since January 2007. And he wants the AIG board to "immediately institute new protections to prevent future abuses."
He says he has the power under state business law to do so as long as the Federal Reserve is propping up the insurer with almost $123 billion in loans announced since Sept. 16.
If AIG doesn't act now, Cuomo vowed he would seek "appropriate sanctions and remedies."
AIG's Response
AIG said today that the company will "fully cooperate" with the investigation.
"On October 10, we issued a clear directive ending all activities that are not essential to the conduct of our business," said a statement issued by AIG. "We will continue to take all measures necessary to ensure that these activities cease immediately. AIG's priority is to continue focusing on actions necessary to repay the Federal Reserve loan and emerge as a vital, ongoing business."