Maurice R. "Hank" Greenberg today sued current and former directors and management of American International Group ("AIG"), seeking to hold them liable for unnecessary and improper decisions to restate the company's earnings and pay a $1.6 billion settlement. Greenberg also sued PricewaterhouseCoopers LLP ("PWC"), AIG's external auditor.
David Boies, counsel for Mr. Greenberg, stated: "Last week AIG's current board and management simultaneously sued Hank Greenberg for a billion dollars and asked the court to dismiss shareholder claims against themselves. As Mr. Greenberg's answer shows:
* there is no evidentiary basis for any of AIG's claims against Mr. Greenberg;
* the most important of AIG's allegations are old, recycled claims that have already been dismissed by the New York Attorney General;
* the accounting decisions and other conduct which AIG now attacks were known, recommended, and approved by AIG's current board and management as well as by AIG's internal and external auditors, lawyers, and other advisors;
* AIG's May 2005 restatement was unnecessary and in important respects improper; the damage to AIG's reputation and financial standing, and the harm to AIG's shareholders caused by the restatement was the result not of any improper conduct by Mr. Greenberg but of the determination by AIG's current board and management to justify their opposition to Mr. Greenberg and insulate themselves from liability."
AIG's complaint ignores Mr. Greenberg's three decades of service to AIG and its shareholders - a stewardship which grew AIG from a small, struggling enterprise to the largest, most successful insurance company in history, and which provides well-compensated jobs for AIG's employees and spectacular long- term returns to shareholders. Mr. Greenberg, who never sold a share of AIG stock during his time at AIG, who never had a contractwith the company, and who regularly rejected proposed salary increases for himself, always put the long-term interests of AIG and its employees and shareholders first.
Unfortunately AIG's recent complaint indicates that AIG's current board and management intend to continue to pursue their own agendas (which include attempting to insulate themselves from liability and criticism, protecting sweetheart contracts and compensation, and pursuing their personal disputes with Mr. Greenberg) at the expense of the interests of AIG and its employees and shareholders.
Mr. Boies noted: "In an effort to dismiss the shareholder claims against them, AIG's current board and management told the court last week that it is not in the interests of the company to make them answer in court for their conduct. It is interesting how their interest in multiplying litigation evaporates when they are the target."
Mr. Boies also said, "In order to begin the process of holding AIG's current board and management accountable for their conduct, with his answer, Mr. Greenberg is also filing claims against them. This is the first opportunity that Mr. Greenberg has had to present his views on the restatement in a court of law, and he welcomes that opportunity."
The lawsuit, which was filed in Delaware Chancery Court, names 16 current and former members of AIG's board of directors and management, including, among others, lead Director and former Interim Chairman Frank Zarb, current AIG Chief Executive Officer Martin Sullivan, current AIG Executive Vice- President and Chief Financial Officer Steven J. Bensinger. The lawsuit also names outside advisors, such as PWC. Mr. Greenberg's suit is a response to AIG's June 13, 2007 amended complaint in a pending derivative suit filed in Delaware.
Sarah Lubman, Mr. Greenberg's spokeswoman, said: "Mr. Greenberg built the largest and most successful insurance company in the world, increasing AIG's market capitalization by some 40,000 percent from 1969, when AIG became a public company under Mr. Greenberg's leadership, through the end of 2004."
Vincent A. Sama, counsel for Howard I. Smith, AIG's former Chief Financial Officer and a co-defendant with Mr. Greenberg in the action brought last week by AIG, stated: "Mr. Smith intends to respond promptly to AIG's Amended Complaint in the Delaware derivative litigation, and will assert appropriate claims against those individuals and entities involved in the transactions at issue. AIG's action against Mr. Smith is particularly inappropriate as Mr. Smith was a primary advocate and champion of strong internal controls at AIG."
The lawsuit filed by Mr. Greenberg today is captioned Greenberg v. Zarb, et al., C.A. No. 769-VCS (Delaware Chancery Court).