Maurice “Hank” Greenberg can continue his $25 billion lawsuit against the U.S. over losses from the bailout of his former company, American International Group Inc., without making claims on behalf of the insurer, a judge ruled.
Greenberg and other minority shareholders have made an adequate showing that the government took from them a portion of the company’s value and their voting power and as a result they “suffered a direct and substantial impact to their own property rights,” Judge Thomas Wheeler of the U.S. Court of Federal Claims in Washington wrote in a ruling today..
Wheeler threw out derivative claims brought by Greenberg’s Starr International Inc., while saying he’s “troubled that counsel for the Treasury Department (the defendant agency) made threatening statements to AIG’s board members.”
“We are pleased that the Court of Federal Claims has denied the motion of the U.S. and permitted Starr International to pursue the claims of two classes of AIG shareholders for tens of billions of dollars that the government took without just compensation and/or illegally exacted in 2008 and 2009,” David Boies, of Boies, Schiller & Flexner LLP, an attorney for Starr, said in an e-mailed statement.
Allison Price, a spokeswoman for the Justice Department, declined to comment on the ruling.
Jon Diat, a spokesman for AIG, said the company is pleased with Wheeler’s ruling.
Starr International, Greenberg’s closely held investment firm and an AIG shareholder, sued the government for $25 billion in 2011. Greenberg called the assumption of 80 percent of the company’s stock by the Federal Reserve Bank of New York in September 2008 a taking of property in violation of shareholders’ constitutional rights to due process and equal protection of the law.
The AIG board on Jan. 9 declined to join the suit, saying that it was unlikely to succeed and risked harming the company’s reputation after the bailout.
In an amended suit filed on March 12, Starr asked Wheeler to reject AIG’s decision, arguing that the board was coerced by the government and failed to conduct an independent review of the merits of Starr’s complaint.
In today’s ruling, Wheeler said that despite threats from a lawyer representing the government and political pressure on the company to stay out of the suit, the AIG “board made a rational business decision.”
A related case brought by Starr against the New York Fed was dismissed in November by a judge in New York.
Greenberg, 88, stepped down as AIG’s chairman and chief executive officer in 2005 amid an investigation tied to an accounting scandal.
The Washington case is Starr International Co. v. U.S., 1:11-cv-00779, U.S. Court of Federal Claims (Washington).
With assistance from Zachary Tracer in New York. Editors: Charles Carter, Fred Strasser
Was this article valuable?
Here are more articles you may enjoy.