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NEW YORK — Former American International Group Inc. CEO Maurice "Hank" Greenberg said Thursday that AIG's board in early 2005 raised questions about a retirement bonus plan now being wrangled over in court.
About two months before he was ousted as CEO, "uneasiness" was growing regarding the plan, Greenberg said during his third day of testimony in federal court in Manhattan.
It appeared the board would not want to continue the plan unless they controlled Greenberg's private firm, Starr International, he said — and that was "intolerable" to Greenberg and Starr's other voting shareholders.
Minutes from a July 2005 meeting indicate that AIG and Starr International both agreed to suspend the compensation plan. The insurance giant has sued Greenberg's private firm, Starr International, accusing it of plundering an AIG retirement program holding $4.3 billion in stock.
Starr's lawyer David Boies later argued Thursday that the fund AIG is trying to reclaim was never intended for AIG, and was not even initially intended to provide retirement bonuses. Boies showed Greenberg a document from 1970 describing the inception of the fund, and asked Greenberg if they mentioned any intent to benefit AIG.
"No, not a word," Greenberg said.
Greenberg was noticeably more at ease once AIG's lawyer Theodore Wells concluded and Boies began his cross-examination. The 84-year old smiled as he told the jury about growing up on a dairy farm in upstate New York, talking his way into law school without a college degree, fighting in two wars and building AIG into a massive, multinational conglomerate.
Greenberg, 84, was forced to retire as CEO of AIG in 2005 amid investigations of accounting irregularities. Starr, the company controlled the retirement fund in question since it was established decades ago, remained AIG's largest shareholder until the government bailed out the insurer last year.
AIG's lawyer Theodore Wells has been arguing that Greenberg took over the fund and then sold about 96 million AIG shares from it because he was angry about getting ousted. AIG wants to reclaim the proceeds of Greenberg's stock sales, and more than 185 million AIG shares still held by Starr International.
The case is a complex one involving dozens of documents — video clips, memos, regulatory filings, annual reports — describing the fund in question in different ways and often in difficult language over the fund's nearly four-decade evolution. The lawyers have been wrangling throughout the week over what jurors should be allowed to see, and what they should not.
U.S. District Judge Jed S. Rakoff, after dismissing the jury for a 10-minute break Thursday afternoon, drily noted his admiration for the jury's ability to pay attention during the back-and-forth.
"It doesn't get any better than this, your honor," Boies joked.
"That's what I'm afraid of," Rakoff replied, to laughter from the lawyers.
Boies will continue to cross-examine Greenberg on Friday. The entire trial, which began Monday, is expected to last no longer than a month.
