Latest AIG Drama: Ex-CEO Jets Stock to Bermuda

June 18, 2009— -- The man who turned AIG into the world's largest insurance company told a court Wednesday that he sent a private jet to Bermuda loaded with company stock to prevent it from being seized.

The admission was the latest bit of drama in two days of testy testimony in a suit brought by AIG against Starr International, a private investment firm and one-time sister company of AIG run by Maurice "Hank" Greenberg who was ousted from AIG in 2005.

Greenberg, 84, spent nearly 40 years building AIG into the world's biggest insurer before his ouster four years ago amid investigations into accounting irregularities. AIG eventually collapsed and the U.S. government pumped in more than $180 billion to keep it afloat in the biggest such financial rescue ever.

On the stand in federal court in New York, it was clear Greenberg was still smarting from his abrupt removal as the company's CEO.

On Wednesday, Greenberg told the federal court in New York he was "angry" and "unhappy" about his ouster, as AIG lawyers tried to draw links between Greenberg's leaving the company and the termination of a $4.3 billion retirement plan for AIG employees that had been controlled by Starr.

AIG accuses Greenberg, chairman of the privately held, Bermuda-based Starr, of illegally taking the stock.

"It was a reaction to the entire environment that was emerging between AIG and Starr International," Greenberg testified. "It was starting to get very ugly."

Greenberg, whose demeanor on the stand shifted from peevish to confrontational, said he was angered about suddenly losing his job at the company.

"Yes. It was sudden and abrupt....Yes, I was angry," he said when asked about his ouster.

The lead attorney for AIG, Theodore Wells, called Greenberg a hostile witness for giving curt responses to questions about documents related to the retirement program.

"Apparently," was the one-word answer Greenberg gave to a question about the stock.

"If you tell me so," Greenberg said in response to another question.

In one heated exchange Greenberg told Wells he was being obviously rhetorical when he told the retirement plan participants in 2005 that their stock would remain in trust for "a couple hundred years."

"When I said a couple of hundred years, I'm speaking to a group of people and trying to build their morale," Greenberg testified. "It's a motivating speech. A couple of hundred years is an exaggeration. Anybody who was there would recognize that that was simply a figure of speech and not a commitment."

Until the U.S. government's $180 billion bailout of AIG in September, Starr – and by extension Greenberg -- was the insurer's largest shareholder.

When the company became a casualty of the financial crisis, leading a government takeover, no one took as great a hit as Greenberg.

In September, Just hours after the federal government announced it would provide AIG its first $85 billion loan secured by an 80 percent stake in the company in an effort to prevent its collapse, Greenberg appeared on ABC's "Good Morning America" to decry the actions of the current board and to admit that he had lost much of what he had built over the course of four decades.

"I've lost my entire net worth, literally my entire net worth," Greenberg said. "I worked 40 years building the greatest insurance company in history, one that everyone in the world envied – who was in this industry."

Greenberg, who privately or through the companies he runs still owns a private jet, an office on Park Avenue and homes in New York City and Brewster, N.Y., likely lost 95 percent of his total assets, or somewhere in the neighborhood of $3 billion, analysts say.

"[Greenberg] is the largest shareholder in the company. Taken together, he and the companies he runs -- C.V. Starr and Starr International -- own 313 million shares of AIG combined," said Ben Silverman, director of research at Insiderscore, a company that tracks executive stock transactions, soon after the company was taken over.

AIG shares trade for $1.48 each today, compared with more than $70 in 2005.

Also in September, just days before the company collapsed, Greenberg settled a lawsuit filed by some AIG shareholders, including the Teachers Retirement System of Louisiana, over the same accounting irregularities that got him investigated – but never prosecuted – by the New York Attorney General.