UK’s Serious Fraud Office to Probe AIG Financial Products Unit

February 12, 2009

Britain’s Serious Fraud Office (SFO) has launched a preliminary inquiry into suspected irregularities at a British subsidiary of American International Group Inc., the SFO said on Thursday.

The SFO said its probe into the UK operations of AIG Financial Products Corp. (AIGFP) did not concern the insurance operations of AIG in Britain or elsewhere.

“It is right for us to look into the UK operations of AIG Financial Products Corp. to determine if there has been criminal conduct,” Richard Alderman, director of the SFO, said in a statement.

“We will use our full range of powers to seek information and to speak to those with an inside knowledge of the company’s operations.”

AIG said it was cooperating fully with the SFO investigation.

“As previously disclosed, AIG began the process of unwinding certain of AIGFP’s and its subsidiaries’ businesses and portfolios, including those in the UK, late last year,” the company said in a statement.

“There are approximately 370 employees in AIGFP worldwide who are working on the winding down of the business.”

The SFO said its probe was separate to two other inquiries into AIGFP being carried out by U.S. authorities and Britain’s financial services regulator, the Financial Service Authority.

AIG, once the world’s biggest insurer by market value, averted bankruptcy last year after a $152 billion rescue package from the U.S. government.

Its troubles were the result of the Financial Product group’s heavy losses on toxic mortgage debt.

(Reporting by Michael Holden; Editing by David Holmes)

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