AIG’s Ex-CEO Greenberg to Testify on General Re Transaction This Week

By | March 8, 2010

Maurice “Hank” Greenberg, the former chief executive of American International Group Inc., will testify Wednesday over a sham transaction involving the insurer and a unit of Warren Buffett’s Berkshire Hathaway Inc, a judge ruled.

New York State Supreme Court Justice Charles Ramos ordered the deposition after Greenberg last week said he was ready to testify in a 2005 civil fraud lawsuit brought by then-New York Attorney General Eliot Spitzer, and now handled by his successor Andrew Cuomo.

The case involves a 2000 reinsurance transaction with Berkshire’s General Re Corp. unit that boosted AIG’s loss reserves by $500 million without transferring risk. Former AIG Chief Financial Officer Howard Smith also was charged in the New York lawsuit.

Federal prosecutors have obtained five convictions and two guilty pleas of former General Re and AIG officials over the transaction, including a conviction of onetime General Re Chief Executive Ronald Ferguson.

In a March 2 court filing, Greenberg contended that a five-year statute of limitations for the government to file criminal charges against him ran out no later than Feb. 21, freeing him to testify. He had in October 2008 invoked his constitutional right against self-incrimination.

“I am prepared to testify regarding the Gen Re transaction,” Greenberg said. “I, therefore, withdraw my earlier invocation of my Fifth Amendment rights.”

Greenberg, 84, is trying to rehabilitate his reputation and settle litigation over the transaction and his forced ouster from AIG in March 2005 after nearly four decades at the helm.

Ramos ordered Wednesday’s deposition after learning at a court hearing that Greenberg was scheduled to leave on March 11 for a two-week trip to China.

“Why can’t it be done on Wednesday?” the judge asked lawyers at the hearing. “Do the deposition on Wednesday.”

Greenberg has denied wrongdoing over the General Re transaction. It is unclear what he might say under oath.

Nicholas Gravante, a lawyer for Greenberg, did not immediately return a call seeking comment. A spokesman for Cuomo’s office had no immediate comment. A lawyer for Smith did not immediately return a call for comment.

Last August, Greenberg agreed to pay $15 million to settle U.S. Securities and Exchange Commission charges that he altered AIG’s records to boost results between 2000 and 2005.

Three months later, Greenberg and AIG resolved years of litigation that followed his exit. AIG agreed to reimburse him and others for as much as $150 million of legal expenses.

Investigators have questioned Buffett about the General Re transaction. The billionaire was never accused of wrongdoing.

The case is New York v. Greenberg et al, New York State Supreme Court, New York County, No. 401720/2005.

(Reporting by Grant McCool and Jonathan Stempel. Editing by Robert MacMillan)

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