The noose is apparently tightening around American International Group and its chairman, Maurice Greenberg.
Bloomberg reports that the embattled executive, who already resigned as chief executive officer, will be asked to leave if he doesn’t cooperate with investigations into the insurer’s accounting practices.
Citing a person who declined to be identified, the wire service said Greenberg will be forced to resign if he refuses to testify at a deposition before New York Attorney General Eliot Spitzer.
“The reputation of the company would suffer tremendous damage if Greenberg were allowed to take the Fifth and continue serving in such as important role,” former federal prosecutor Christopher Bebel told the wire service. “The harm to AIG would be less if [the company separates itself] from Greenberg.”
The company is already reportedly anticipating the possibility that it will experience a fair amount of financial harm. Indeed, the Wall Street Journal reported Friday that AIG might restate as much as $3 billion as a result of as many as 30 insurance transactions. Further, the insurer still hasn’t assessed another 60 transactions that could be problematic, the paper reported.
What’s more, some senior AIG executives could face regulatory scrutiny since they were aware of many of these transactions, according to the Journal. Company spokesman Chris Winans told the newspaper that the insurer would not comment.(See “Ron’s Rant” for commentary on the accounting and debt ramifications of the AIG situation.)
The insurer’s potential errors reportedly date back as far as five years. The possible missteps include the insurer’s booking revenue and income earlier than it should have to its transferring liabilities from its books even though the company was still responsible for them, according to the newspaper.
AIG’s directors are also mulling whether to get rid of Starr International Co. a private holding company that has paid deferred compensation to AIG employees, the Journal reported.
Given the internal and external investigations of the company, it’s unclear whether AIG will be able to meet its new, revised deadline of Thursday for filing its 2004 annual report. The 10-K was initially due on March 16.