AIG Former AIG duo named in fraud suit

David Teather in New York
Friday May 27, 2005
http://www.guardian.co.uk/business/story/0,,1493668,00.html
New York attorney general Eliot Spitzer last night filed a civil lawsuit against AIG, part of an escalating inquiry into allegations of fraud in the insurance industry.

The suit named former chief executive Maurice "Hank" Greenberg and former finance chief Howard Smith, the pair who built the group into one of the world's largest insurers. The suit said they were involved in deals structured to exaggerate the strength of the firm's underwriting business and prop up its share price.

The irony of this case is that AIG was a well-run profitable company that didn't need to cheat," Mr Spitzer said. "And yet the former top management routinely and persistently resorted to deception and fraud in an apparent effort to improve the company's financial results."

Both men have denied wrongdoing. Mr Spitzer's complaint includes emails that support the allegations that Mr Greenberg was personally involved. Mr Greenberg resigned in March. Mr Smith was fired for refusing to cooperate with the inquiry.

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