March 14, 2005
Will Another Head Roll?
Maurice Greenberg has led American International Group Inc. (AIG) since 1967, but his days as CEO may end as soon as today as the company deals with growing pressure from regulatory investigations. The company is being investigated by New York Attorney General Eliot Spitzer for bid-rigging in the insurance brokerage industry, an investigation that resulted in the resignation of his son, Jeffrey, who was CEO of Marsh & McLennan. On Feb. 14, AIG disclosed (press release here) that the SEC and Spitzer were investigating it for possible earnings manipulation related to a "non-traditional insurance contract" (how's that for a red flag) with General Re, a unit of Berkshire Hathaway; Greenberg was involved directly in the transaction. The company also settled civil and criminal charges in November 2004 by paying a $126 million fine and agreeing to a series of reforms that include a beefed-up compliance program related to more non-traditional insurance contracts that allowed companies to manipulate their earnings. According to a Wall Street Journal story (here), Greenberg has retained Robert Morvillo, who was lead trial counsel for Martha Stewart, to represent him personally in the SEC and NYAG investigations. The pressure on boards to deal quickly with CEOs (and other officers) caught up in federal and state investigations just keeps growing. (ph)
UPDATE: The answer is yes. Greenberg retired as CEO of AIG this evening (March 14), although he will stay on as Chairman of the Board. His successor is Martin Sullivan, who was the co-chief operating officer and a lifelong employee of AIG. A Wall Street Journal story (here) states that the Board was concerned about Greenberg's involvement in the General Re insurance transaction, and that e-mails indicate Greenberg's large role in the deal -- yet another instances where the e-mails provide the paper trail. (ph)
TrackBack URL for this entry:
Listed below are links to weblogs that reference Will Another Head Roll?: