Wednesday, May 4, 2005

The Fight Over Greenberg's Trinkets in His AIG Office

The split between American International Group and its former long-time CEO Maurice Greenberg has all the hallmarks of a nasty divorce, according to a front-page Wall Street Journal story here.  Among the items being fought over are a Remington sculpture, Chinese vases, and a Van Gogh painting.  While celebrity divorces are always an interesting side show for the gossip-minded (think Jennifer, Brad, and Angelina), the more interesting aspect to me is that among the items Greenberg seeks to recover from his office are personal files containing documents.  While those files apparently contain letters from his mother during his military service in World War II, they may also contain information that will be of interest to the government regulators focusing on Greenberg's involvement in the accounting problems disclosed by the company this past Sunday (see earlier post here).  In addition, records from two off-shore entities led by Greenberg that have had substantial dealings with AIG (and control approximately 15% of the company's stock) may still be in his AIG office, no doubt enjoying the fine art in close proximity.

The distinction between "personal" and "business" records is crucial for Fifth Amendment purposes -- documents in the former category may be subject to a self-incrimination claim regarding the act of production that can ultimately thwart the government's ability to obtain them (U.S. v. Hubbell is the key recent case), while a corporation's documents are not protected by the Fifth Amendment (although check Lance Cole's recent article on extending the Fifth Amendment privilege to organizations discussed here).  Given that AIG is scrambling to demonstrate its cooperation to fend off any threat of a criminal charge, the company likely will be more than happy to turn over whatever records it can get its hands on that the regulators may want to review.  Greenberg, on the other hand, will not want his personal files reviewed by the government, and the records of the off-shore companies (Starr International and C.V. Starr Foundation) will not be easy to obtain if they are returned to the countries of incorporation: Bermuda and Panama.  While fighting over baubles is commonplace in a divorce -- recall the nasty fight between Jack Welch and his former wife Jane over the perks in his GE retirement package -- the issues here run in a very different direction as the government seeks documents.  While hell hath no fury like a forced-out CEO, Eliot Spitzer, the SEC, and the DOJ probably want nothing more than a chance to rummage through Greenberg's personal files to learn about how he ran AIG and any "bodies" that may be buried in the company.  This one is going to go on for quite a while, and may implicate the government's interest in enforcing its subpoenas. (ph)

Investigations, Securities | Permalink

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