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(Adds Greenberg’s departure, his successors, comments starting in fifth paragraph.)
By Ian Katz and Hugh Son
March 12 (Bloomberg) -- American International Group Inc. was unprepared for the financial crisis that forced the insurer to accept a $182.3 billion bailout from the U.S. government, the company’s former general counsel said.
AIG didn’t have the “infrastructure to call upon to respond,” Anastasia Kelly said today at a corporate law conference at Georgetown University Law Center in Washington. Because the company was so diverse and global, “there was no one in charge,” she said. Mark Herr, a spokesman for New York- based AIG, declined to comment.
AIG agreed in September 2008 to turn over a majority stake to the U.S. after failing to get support from Warren Buffett’s Berkshire Hathaway Inc. or arrange a loan through Goldman Sachs Group Inc. and JPMorgan Chase & Co. Robert Willumstad, who became AIG’s third chief executive officer in three years when he took over in June of 2008, was replaced by the government before presenting the turnaround plan he’d been preparing.
Kelly, 60, joined law firm DLA Piper this month after leaving AIG in December in protest of government-imposed pay limits. Kenneth Feinberg, the Obama administration’s special master for executive compensation, had ruled that base salaries there shouldn’t exceed $500,000, with some exceptions. Kelly was awarded more than $3 million in severance from AIG.
No ‘Normal Transition’
The company wasn’t prepared when former CEO Maurice “Hank” Greenberg departed in 2005, Kelly said in an interview. “Hank didn’t plan to leave when he left, so the normal transition when a CEO leaves that you hope happens when a CEO leaves didn’t happen.”
Greenberg ran AIG for 38 years, exiting amid regulatory probes by former New York Attorney General Eliot Spitzer. Kelly said she has “a great deal of respect for the businesses he built.” AIG, once the world’s largest insurer, had operations in more than 100 nations.
As general counsel, Kelly was involved in lawsuits against Greenberg, 84, including a case accusing him of improperly taking $4.3 billion in stock. A federal jury later rejected AIG’s claims over the shares. The company settled all lawsuits with Greenberg in November and said it would reimburse as much as $150 million of his legal fees.
Greenberg’s successor, Martin Sullivan, told analysts in 2007 that losses tied to the housing crisis would be manageable. He started a $5 billion share buyback that year, depleting funds before the company’s investments plunged in value.
‘Precautionary Steps’
The initial bailout, an $85 |
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