Deal by A.I.G. Executive Puts Pressure on Ex-Chief
By JENNY ANDERSON
New York Times
May 16, 2005
The decision last week by a senior executive at American International Group, the huge insurer, to cooperate with an investigation by Eliot Spitzer, the New York attorney general, ratchets up the pressure on Maurice R. Greenberg, the company's former chairman and chief executive, legal experts say.
The deal "signals that Mr. Greenberg is clearly the ultimate prize in this investigation and Spitzer's office thinks they can make this case in fairly short order," said Robert Mintz, a former federal prosecutor and head of the white-collar criminal defense group at the McCarter & English law firm. "The more usual course is to work from the bottom up, cutting deals with midlevel, less culpable people."
Joseph H. Umanksy, who is a senior vice president in the corporate division of A.I.G. as well as president of A.I.G. Reinsurance Advisers, a reinsurance unit, made a deal last week to cooperate with Mr. Spitzer's office in exchange for immunity from prosecution, people briefed on Mr. Spitzer's investigation said. He has not been charged with any wrongdoing.
The Department of Justice, the Securities and Exchange Commission and the New York State Insurance Department are all investigating A.I.G. for deals that may have helped it make its financial position look stronger than it really was.
Last week Mr. Spitzer's office reviewed a draft copy of an internal A.I.G. report, compiled by lawyers at Paul, Weiss, Rifkind, Wharton & Garrison as well as Simpson Thacher & Bartlett, outlining who was responsible for designing and carrying out certain transactions which the company has determined were not properly accounted for. Mr. Umansky figures prominently in that report, said one person who has read it. The report references correspondence between Mr. Greenberg and Mr. Umansky about certain offshore reinsurance deals, that person said.
Mr. Umansky's lawyer, Seth Rosenberg of Clayman & Rosenberg, declined to comment, as did spokesmen for Mr. Spitzer and A.I.G.
Mr. Greenberg's lawyer, David Boies, has said that all accounting decisions at A.I.G. were not made solely by Mr. Greenberg, but "by present senior management, including operational heads, and the company's present directors and auditors as well."
Mr. Umanksy played an important role in structuring deals with offshore reinsurance companies. In March A.I.G. disclosed that certain transactions would reduce its net worth by $2.7 billion. A.I.G. also disclosed a $2.4 billion credit to its net worth as a result of complex accounting for derivatives.
Investigators are looking into transactions between A.I.G. and several reinsurance companies to determine whether certain deals appropriately transferred the necessary risk to be considered insurance. Insurers buy reinsurance to spread out the risk of loss.