AIG Won't Join Former CEO's Lawsuit Against the Government
The insurance company said it will not join former CEO Hank Greenberg's lawsuit.
Jan. 9, 2013 — -- AIG decided today not to join former CEO Maurice "Hank" Greenberg's lawsuit against the government over the insurer's massive bailout in 2008.
During a board meeting Wednesday, AIG said it refused a demand by Greenberg's Starr International Co. to join the suit in its entirety, "and will neither pursue these claims itself nor permit Starr to pursue them in AIG's name."
"America invested in 62,000 AIG employees, and we kept our promise to rebuild this great company, repay every dollar America invested in us, and deliver a profit to those who put their trust in us," said Robert S. "Steve" Miller, chairman of the AIG board, in a statement after the decision. "To date, AIG has returned $205 billion to America, including a profit of $22.7 billion. We continue to thank America for its support."
On Tuesday, the company announced that the insurance firm's board of directors would consider a legal request by financial services company Starr International, of which Greenberg is CEO.
Greenberg asked AIG to take over or allow Starr to continue to pursue the lawsuit that he filed contesting the "constitutionality" of the government's rescue of AIG in Sept. 2008.
AIG, based in New York City, calls itself the world' largest insurance organization, with 88 million customers in over 130 countries.
Greenberg's lawsuit seeks about $25 billion in damages.
Greenberg filed the lawsuit in Nov. 2011 in the U.S. Court of Federal Claims and the U.S. District Court for the Southern District of New York. His allegations include that the government's 2008 receipt of a 79.9 percent equity interest in AIG constituted a wrongful "taking" without just compensation, in violation of the Constitution.
His claims are on a "derivative" basis in the name of AIG and on a "direct" basis on behalf of Starr and other similarly-situated shareholders.
AIG said its board had two other options in response to the derivative claims. First, it could have taken over Starr's claims and prosecute them alone. Second, the insurance firm could have allowed Starr to prosecute the claims on AIG's behalf.
"AIG has paid back its debt to America with a profit, and we mean it when we say thank you to the American people," AIG CEO and President Robert H. Benmosche said in a statement on Tuesday. "At the same time, the Board of Directors has fiduciary and legal obligations to the company and its shareholders to consider the demand served on us and respond in a fair, appropriate, and timely manner."
Greenberg has been widely criticized for filing his lawsuit. Rolling Stone Magazine's political writer Matt Taibbi wrote Greenberg "should be shot into space for suing the government over the AIG bailout."