Stand By Me

Elizabeth Monrad, the ex-CFO of General Re, is in a fight for her freedom in a Hartford court over an alleged phone reinsurance deal with AIG.
Kate PlourdFebruary 1, 2008

All eyes in the General Re case may be on the possibility of Warren Buffet testifying. But whether Elizabeth Monrad, the former CFO of the Berkshire Hathaway subsidiary, takes the witness stand is another issue entirely.

The accounting-fraud case, which is currently being heard in a U.S. district court in Hartford, involves an allegedly phony reinsurance deal made between General Re and American International Group (AIG) to help boost the latter’s loss reserves by about $500 million in late 2000 and early 2001. General Re former senior vice president Richard Napier, who is cooperating with prosecutors, has testified that Monrad said AIG would have “a tough time getting the accounting they want out of the deal” in a November 2000 conference call. In that same phone call, Monrad allegedly said that “these deals are a little bit like morphine. It’s very hard to come off of them.”

Monrad’s attorney, Reid Weingarten, has argued that because Buffett had knowledge of the deal, Monrad didn’t think it was shady. “Buffett is an iconic figure,” he said at an October pretrial hearing. “He commanded enormous respect with Elizabeth Monrad. The evidence is beyond dispute that he knew about the transaction. He didn’t stop it. It is incredibly important to our defense that Elizabeth Monrad believed Buffet was on board.”

Wayne State University law professor Peter Henning says the chances of Monrad taking the stand are slim. “The trend in these cases has been to keep [defendants] away from explaining their actions,” he says.

Monrad, who was CFO from 2000 to 2003, faces up to 230 years in prison and a fine of up to $46 million for charges of conspiracy, securities and mail fraud, and making false statements. Neither Buffet, the CEO of Berkshire Hathaway, nor Maurice Greenberg, the former CEO of AIG, is named as a defendant. The trial is expected to go to the jury this month.

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