Aig's board is prepared to remove Maurice Greenberg as chairman should he fail to cooperate with investigations of reinsurance transactions...
AIG’s board is prepared to remove Maurice Greenberg as chairman should he fail to cooperate with investigations of reinsurance transactions that may have manipulated earnings, a person familiar with the matter said.
Greenberg, who stepped down as chief executive officer of the world’s largest insurer last week, would be forced to resign from the board if he refuses to testify at a deposition before New York Attorney General Eliot Spitzer, said the person, who declined to be identified. AIG fired Chief Financial Officer Howard Smith this week for invoking his Fifth Amendment right against self-incrimination, two people familiar said.
AIG’s board, which discussed the investigations at an all-day meeting yesterday, is trying to resolve the probes to restore investor confidence. AIG shares have fallen 24 percent, wiping out more than $45 billion in market value, since the company said Feb. 14 that it received subpoenas from Spitzer and the Securities and Exchange Commission (SEC).
“The reputation of the company would suffer tremendous damage if Greenberg were allowed to take the Fifth and continue serving in such as important role,” said former federal prosecutor Christopher Bebel, who now practices law in Houston. “The harm to AIG would be less if they separate themselves from Greenberg.”
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Greenberg’s attorneys, Robert Morvillo and David Boies, yesterday didn’t return phone calls seeking comment, and Spitzer spokesman Darren Dopp declined to comment. Greenberg is overseas through next week, Winans said.
Greenberg, 79, ran AIG for almost 40 years before relinquishing the CEO post last week to Martin Sullivan, 50. Sullivan, formerly co-chief operating officer, told analysts on a March 15 conference call that AIG’s success would be measured “in large part” on how well it addresses regulatory issues.