View this article online: https://www.insurancejournal.com/news/international/2009/03/26/99055.htm
AIG executives in Europe are adamant they should not have to return their controversial bonuses and some feel that pressure on them to do so may amount to blackmail, according to a company employee and internal emails.
AIG Financial Products unit head Gerald Pasciucco told a staff meeting for UK and Paris employees on Monday that he thought a demand for repayments was to a certain extent “blackmail,” said a London-based recipient of one of the retention bonuses from the bailed-out insurer.
“The vast majority of people in London have made the decision that the request is pretty offensive,” the employee said. “It effectively constitutes blackmail whether it is criminal or not. There is no moral reason to give it back.”
A company spokesman, however, said American International Group had no concerns as to the legality of any repayments.
New York Attorney General Andrew Cuomo has pressed AIG and other banks and companies receiving government bailouts on the issue of bonuses, saying those who had returned the money “have risen to the occasion and I applaud them.” His office is investigating whether the AIG bonuses were paid fraudulently under New York law.
The attorney general of Connecticut, where the Financial Products unit blamed for bringing AIG close to collapse is headquartered, has subpoenaed 14 current and former AIG executives in a probe of compensation and bonus practices.
The employee at the meeting said Pasciucco recommended that bonus recipients strongly consider returning the money but said any decision to do so was an individual choice. The employee asked not to be identified by name because of a lack of authorization to speak publicly about the matter.
After the meeting, a compliance officer for the Banque AIG unit in London went so far as to ask UK authorities from the Serious Organized Crime Agency (SOCA) to probe whether demands to return the payments could be considered extortion, according to emails obtained by Reuters.
But AIG spokesman Mark Herr said in a statement on Wednesday that the concern by compliance officer David Haig “on the legality of the repayments or potential repayments was not shared by the company.”
Herr said that SOCA “has granted consent for the repayments to go forward.” A SOCA spokesperson said earlier in the day that the agency could not confirm or deny if the matter was under investigation. However, such a probe likely would be a departure for the agency, given that its mission is to investigate serious organized crime matters.
Some AIG employees have said they have a tough choice to either give back bonuses they believe they earned lawfully or face the possibility that their names could be made public by Cuomo, who has been investigating about $165 million in retention pay awarded by the company.
One executive vice president even published his resignation letter in the New York Times on Wednesday. The executive, Jake DeSantis, wrote that he had nothing to do with the credit default swap deals that led to the company’s massive government bailout.
In his email sent Tuesday to Banque AIG employees, Haig recommended that they not agree to make any repayments until SOCA had examined the issue, according to a copy of the email obtained by Reuters.
Haig wrote that such payments could require consent by authorities under “money laundering provisions.”
Banque AIG Deputy Chief Jim Shephard dismissed Haig’s concerns of illegal pressure either by the New York attorney general or AIG executive Pasciucco.
In an email to employees, also sent on Tuesday and obtained by Reuters, Shephard said the unit had gotten a clear legal opinion from a senior UK lawyer that “there is no evidence of blackmail on the part of either Andrew Cuomo or Gerry Pasciucco as a matter of UK law.”
Decisions to return bonuses “are individual choices for each of you which you should be allowed to make without the threat that you may be committing a criminal offence hanging over your heads,” he wrote.
A Banque AIG receptionist who answered the telephone at the company’s London office on Wednesday said Haig was not in the office. Haig did not immediately respond to an email from Reuters.
Cuomo, whose office declined comment on Wednesday, said earlier this week that about $80 million of the $165 million in AIG bonuses were paid in the United States, while the rest was outside U.S. jurisdiction. He said at the time that 15 of 20 leading bonus recipients had agreed to give them back in full.
Cuomo said some of the five top earners had refused to give back their bonus, but he declined to say how many. “The reasons are obvious. Some people are outside of the jurisdiction,” he told reporters.
(Reporting by Martha Graybow; Additional reporting by Chris Wickham in London and Grant McCool in New York; Editing by Gary Hill)