Risk Management

Greenberg Slams AIG, PwC on Restatement

The former insurance titan charges that AIG’s current management and PricewaterhouseCoopers, the company's auditor, "have changed their minds" abou...
Stephen TaubAugust 5, 2005

Asserting the he followed proper accounting practices, Maurice Greenberg, the former chief executive of American International Group Inc., lambasted his former company for restating five years of earnings and criticized AIG’s auditor, PricewaterhouseCoopers, for not raising questions with the insurer’s audit committee.

The former insurance titan made his comments in a “white paper” obtained by several media outlets. “Mr. Greenberg disagrees with many of the accounting changes made and believes that many of the changes are damaging to the interests of AIG and its stockholders,” the document states, according to Reuters.

The white paper was drawn up by Greenberg’s lawyers in response to AIG’s 2004 10-K, filed with the Securities and Exchange Commission on May 31, according to the Associated Press. Greenberg stated that he was unable to respond to each of the accounting changes because AIG would not provide him with critical documents, the wire service reported.

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He also asserted in the paper that AIG’s current management and PwC “have changed their minds” about how certain items should be accounted for, according to the AP’s account.

“Significantly, many of the AIG and PwC personnel who were involved in the restatement were the same personnel who made or participated in the initial accounting determination that they have now reversed,” the paper reportedly says.

According to Reuters, the paper singles out PwC, AIG’s auditor of 20 years, saying its “past performance and role in the restatement warrants a close examination.” Specifically, the document challenges the accounting firm for not raising questions it had with AIG’s audit committee, the wire service noted.

The paper also reportedly theorizes that the restatement was motivated, in part, by a fear of regulators. “AIG’s rush to concede wrongdoing may be explained in part by the current regulatory environment,” it says, but it “cannot be justified on that basis.”

What the former CEO calls a “rush to judgment” may have been partly sparked by “the outside directors’ interest in legitimizing their removal of Mr. Greenberg,” he reportedly said, and motivated by “the long-held ambitions of [at] least one or two such directors to take a leading role at AIG.” The paper does not name specific directors, according to the AP.

AIG spokesman Chris Winans told the AP the company had not seen the white paper and could not comment on it, adding, “We stand by our (accounting) decisions as fully disclosed in our recently filed 10-K.” PwC spokesperson David Nestor also refused comment to the wire service, noting that the company had not seen the document.