FBI is widely reviewing insurers' accounting
By Eric Lichtblau
The New York Times
May 6, 2005
FBI is widely reviewing insurers' accounting The Federal Bureau of Investigation is trying to determine whether the accounting irregularities uncovered at American International Group represent a pervasive problem in the U.S. insurance industry, according to agency officials.
The FBI has instructed agents at its 56 field offices around the United States to talk to regulators and industry executives, review civil filings and look for patterns that mirror the problems seen in recent months at AIG, the officials said Wednesday.
"We do not want to be caught napping on this," said Chris Swecker, an assistant director at the FBI who oversees the financial crimes unit. "We are taking a very, very hard look at this to see if it represents a pervasive problem."
AIG, the embattled insurance giant, is under investigation by the U.S. Securities and Exchange Commission, the Justice Department, the New York State Attorney General's Office and the New York State Insurance Department over accounting improprieties and the use of transactions that inflated its financial strength. The company disclosed on Sunday that accounting problems uncovered in an internal review would force it to reduce its net worth by $2.7 billion, or $1 billion more than it had previously estimated.
Chris Winans, a spokesman for AIG, said he could not comment on the merits of the FBI's latest review but said that "in general, we welcome any constructive effort aimed at improving the environment of the insurance industry."
"AIG is cooperating with government authorities to the fullest extent possible, and that would include state, federal and regulatory authorities," he added.
The FBI's review, which is being handled by the financial crimes section, threatens to increase pressure on insurance companies to show that they are in compliance with accounting rules and regulatory requirements.
The review caught some industry executives by surprise. Some pledged their cooperation, while others cautioned that it was premature of the FBI to suggest that AIG represented anything other than an isolated incident.
FBI officials compared the current review to those conducted into the savings and loan crisis in the 1980s and, in more recent years, into the corporate fraud cases at large corporations like Enron.
Swecker said that the FBI's review began two or three months ago and that it was too soon to suggest whether the problems at AIG were an indication of a broader industry problem.
"I'm not going to say it is the next crisis, but I will say we are looking at it" in an effort to determine whether the industry is vulnerable to becoming "the next big one" in terms of corporate scandals, Swecker said.
Alan Haskins, the antifraud coordinator for the National Association of Insurance Commissioners, said the group was not aware of the FBI's review, but he pledged its cooperation.
"We have always had and will continue to have an ongoing dialogue with the FBI on antifraud matters and regulatory matters," he said. "We'll continue to try to assist them with whatever they need."
Some in the insurance industry were skeptical about the FBI review. Robert Hartwig, chief economist for the Insurance Information Institute in New York, a trade consortium, said any comparisons the FBI may be seeking to the savings and loan crisis or Enron-like scandals were misguided.
"They will find, I'm confident, that there are no appropriate analogies here to those types of broad industry problems," Hartwig said.
"What we have here are isolated cases of accounting improprieties that have been uncovered."
Greenberg threatens to sue
The ousted chief of AIG, Maurice Greenberg, is threatening to sue it for the return of possessions including a Van Gogh painting and his dog's medical records, Agence France-Presse reported from New York.
Howard Hopinkski, a spokesman for Greenberg's chief lawyer, said in an interview Wednesday that some assets being held by AIG belong to Greenberg and some to three groups controlled by him.