AIG Monitor Was Witness to Meltdown, House Investigators Say
By Lorraine Woellert
April 1, 2009
March 31 (Bloomberg) -- House investigators are seeking four years' worth of confidential reports prepared by a monitor hired as part of a prosecution deal to oversee American International Group Inc.'s business practices.
The monitor, Washington lawyer James Cole, "had a seat at the table" as AIG suffered its financial meltdown, correspondence from the House Oversight and Government Reform Committee said.
The panel asked the Justice Department and the Securities and Exchange Commission for Cole's reports in letters dated March 30. The committee asked that the reports be delivered by tomorrow.
AIG hired Cole, a partner at the law firm Bryan Cave LLP, to monitor the company as part of a 2004 agreement with federal prosecutors. AIG paid $126 million in fines under the deal, in which prosecutors accused the company of violating accounting standards.
AIG did not admit wrongdoing and agreed to the deal to avoid prosecution. The company hired Cole as part of the agreement to monitor the company's regulatory compliance, financial reporting, whistleblower protection and employee retention policies. He has submitted confidential reports to Justice and the SEC since 2005.
Under the agreement, Cole was an observer to AIG board meetings and had routine access to the company's top executives, House lawmakers said in the letters.
'Seat at the Table'
"Mr. Cole had a seat at the table as the company decided to oust two CEOs, developed its strategy in the midst of the housing bubble and its subsequent collapse, and made critical decisions concerning restructuring" of the company's financial products division, lawmakers said.
The letters were signed by committee Chairman Edolphus Towns, a New York Democrat, and Representative Darrell Issa of California, the panel's top Republican.
"With taxpayers now having an 80 percent stake in AIG, we believe that review of these reports is critical for Congress to better understand how AIG became financially crippled," the lawmakers said.
Cole, a former deputy chief of the Justice Department's public integrity section, didn't immediately return a call requesting comment.
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