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Both the CFO and a vice president were dismissed after reportedly refusing to answer questions from federal investigators who are probing AIG's relationships with several reinsurers.
Stephen Taub, CFO.com | US
March 22, 2005
American International Group Inc. fired chief financial officer Howard Smith and vice president for reinsurance Christian Milton late yesterday, according to press reports.
Smith took a leave of absence from AIG last week on the same day that Maurice Greenberg was forced out as chief executive officer. Both Smith and Milton were fired, however, after reportedly refusing to answer questions from federal investigators who are probing AIG's relationships with several reinsurers.
The two individuals "were terminated pursuant to company policy that requires employees to cooperate with government authorities on matters pertaining to the company," said AIG spokesman Chris Winans.
The Wall Street Journal speculated that if the two men invoked their Fifth Amendment rights, there is a growing possibility that criminal charges could be filed against AIG or against individuals. The departure of Smith and Milton also increases the possibility that they may make a deal with prosecutors and regulators, the paper also suggested. (A new post on the CFO Blog: Ron's Rant also examines the choice of cooperating or clamming up.)
Last week AIG also delayed the filing of its 2004 annual report. The New York Times reported that the Securities and Exchange Commission, the Department of Justice, and the New York attorney general's office are examining how AIG's transactions with several reinsurers may have improperly affected the company's financial results.
In addition to AIG's transactions with General Re, a unit of Berkshire Hathaway — dealings that eventually precipitated Greenberg's ouster as CEO — investigators are also examining the insurer's relationships with Union Excess Insurance Co. and Richmond Insurance Co., according to the Journal.
Smith's duties were assumed last week by Steven Bensinger, who was named executive vice president and CFO when Smith was placed on leave. Co-chief operating officer and vice chairman Martin Sullivan took on the roles of CEO and president; Greenberg still serves as nonexecutive chairman.