Wednesday, June 10, 2009
The saga continues. Late yesterday I receive an email from Patrick Dorton of the public relations firm Rational 360, identifying himself as a spokesperson for Starr International Company, Inc. and asking that I post the following reply to AIG's response. For those of you who missed this exchange last week, it began with a posting about a newspaper article reporting that AIG was trying to claw back 290 million AIG shares that are a Swiss foundation had received from Starr International Company, a company established, according to the article, to provide AIG retiring executives with bonuses that would not be reflected on AIG's books. Within hours the posting generated a strong response from AIG's Media Relations department asserting that there were numerous inaccuracies in the newspaper article. Now the other side has weighed in with the following comments, which I reproduce here with permission.
I am writing in response to the recent email from AIG posted on your blog regarding AIG’s lawsuit against Starr International.
By its own admission, AIG is prosecuting these claims for only one purpose: To add hundreds of millions of dollars to a bonus pool available to AIG’s top 700 executives. Earlier this year, Starr International prevailed on all of its claims against AIG and, last year, a federal judge dismissed AIG’s claims to control Starr International's board of directors. With that claim dismissed, AIG now implausibly asserts that in 1970 it established a “trust” worth over $100 million at the time (and later worth in excess of $20 billion), even though it admits that this “trust” was never put in writing, never disclosed to AIG shareholders or the SEC, and never included on AIG's balance sheet or financial statements. AIG also asserts that it never asked Starr International for any confirmation of the “trust," and that it first made a claim against Starr relating to this "trust" only after Starr had sued AIG for refusing to return artwork owned by Starr.
Mr. Greenberg is not a party to this action and AIG’s focus on Mr. Greenberg is apparently designed to obscure the lack of evidentiary support for its claims and to distract attention from its wasteful use of shareholder and taxpayer funds to enrich and protect its management and advisors.
The issue presented is very simple: if AIG prevails, it has said that it will use this money to reward its most senior executives. If Starr International prevails, the money will be preserved and used for charitable purposes, as Starr International’s shareholders intended.