Thursday, March 24, 2005
Our post of March 22, 2005 was titled the"Assertion of the Fifth Amendment Leads to Firing of Two AIG Executives." We predicted that the focus on AIG chair, Maurice "Hank" Greenberg would be heightened as a result of these current events. It is not surprising, therefore, to see the Wall Street Journal reporting today that Greenberg may be faced with the issue of whether to take the 5th when deposed by "regulators investigating whether his firm mislead investors by manipulating its books."
There are several interesting aspects to consider here:
1. What would Martha Stewart advise? Will the deterrent effect of the Stewart prosecution be to keep people from cooperating with the government in their investigations? The government would likely assert that the deterrent effect was supposed to be - to secure truthful information. But one wonders if that will be the net result. This may be a good case to find out what happens when they have the choice or talking or taking the 5th in a post-Martha Stewart world.
2. Is the government pitting Greenberg against the company? If the company fails to cooperate, there are serious ramifications to it. Yet their cooperation may prove problematic to protecting the employees. Is this really beneficial for the company?
3. Is the company in a superior position to cooperate with the government, to the detriment of employees? In an article I authored back in 2002 in 23 Cardozo Law Review 795, titled "White-Collar Cooperators: The Government in Employer-Employee Relationships," I stated that "[a] corporation may be in a superior position in securing the benefits associated with cooperation. In contrast to individuals, the financial resources available to the organization may enhance its ability to be first in the race to the courthouse to serve in the role of government cooperator."
4. And what about the 5th Amendment? It doesn't mean guilt. It's a basic right. Or is it still?
5. And with so many parties looking over the shoulder of AIG right now ( Wall Street Jrl reports - New York Attorney General Spitzer, SEC, DOJ and some state insurance regulators) who can even keep track of all the players in this field.
What would you advise Greenberg to do?
PS: Former AIG CEO Greenberg's counsel is Robert Morvillo, who was the lead trial counsel for Martha Stewart. It will be interesting to see whether there is a "Martha Stewart Effect" on Morvillo's advice about whether Greenberg should testify before the various agencies investigating AIG (and him), or will assert the Fifth Amendment privilege. (ph)