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Christian Hansen for The New York Times
Maurice R. Greenberg, the often combative former chief executive of American International Group, began a news media counteroffensive on Monday to repair his legacy days after the bruising end to his 12-year court battle with the New York State attorney general.
Mr. Greenberg, 91, complained at a news conference on Monday of being outspun by the attorney general’s office on Friday, when it somewhat unexpectedly announced a settlement in a 2005 civil accounting fraud case against him that was brought by Eliot Spitzer when he was state attorney general.
The settlement was announced by the current state attorney general, Eric T. Schneiderman, before the defense team expected, and his depiction of it went his way.
The $9.9 million settlement included carefully written statements in which Mr. Greenberg and his co-defendant, Howard I. Smith, A.I.G.’s former chief financial officer, took responsibility for the two transactions at issue in the case. They acknowledged that the transactions, which had improved A.I.G.’s reported loss reserves and underwriting income, resulted in inaccurate portrayals of those aspects of the company’s financial condition to investors.
But the statements, the product of weeks of negotiations with the attorney general’s office, did not use the word fraud, and did not include any explicit admission of wrongdoing. Yet a headline in Mr. Schneiderman’s announcement said, “Greenberg Admits to Initiating, Participating and Approving Two Fraudulent Transactions” while he ran A.I.G.
Some news headlines did not distinguish between the defendants’ statements and Mr. Schneiderman’s portrayal of what those statements said.
“Greenberg Admits Aiding in Fraudulent Deals in AIG Settlement,” Bloomberg News said. “Ex-AIG CEO Greenberg admits to accounting fraud, settles lawsuit,” said Reuters. The headline in The New York Times was “Two Ex-Executives Settle A.I.G. Fraud Case.” The Wall Street Journal said, “Greenberg Settles Civil-Fraud Allegations in AIG Case.”
At his news conference on Monday, at the Midtown Manhattan headquarters of the insurer C. V. Starr, where he is chief executive, Mr. Greenberg bristled in response to a question from a reporter from The New York Post, where the headline on Saturday read, “Hank Surrenders: Greenberg settles fraud suit, will cough up $9M,” using the name Mr. Greenberg often goes by.
The dollar figure represents part of the performance bonuses the defendants received in the four years that A.I.G’. s results were affected by the transactions. The state had sought more than $50 million in bonuses the defendants had received for those years, including interest, and unsuccessfully sought to bar Mr. Greenberg from the securities industry or from serving as an official of a public company.
At Monday’s news conference, Mr. Greenberg said Mr. Spitzer’s case had contributed to the downfall of A.I.G., which survives in shrunken form after a $185 billion federal bailout in 2008, three years after Mr. Greenberg’s ouster as chief executive. An editorial on Monday in The Wall Street Journal, a longtime critic of Mr. Spitzer, called the settlement “Hank Greenberg’s Vindication.”
In an appearance earlier Monday on Fox Business Network, Mr. Greenberg criticized New York’s Martin Act, which allows the state to pursue fraud charges against executives without having to prove intent. Asked if he felt vindicated, he replied, “I feel good that it’s over, but that’s not vindication, not yet.” He called for an apology from Mr. Schneiderman, who declined to provide one.
“Mr. Greenberg’s admission speaks for itself: Mr. Greenberg initiated, participated in and approved two transactions that fundamentally misrepresented A.I.G.’s financial performance to shareholders,” said Eric Soufer, a spokesman for Mr. Schneiderman. The statements “amounted to an admission of wrongdoing,” Mr. Soufer said
David Boies, Mr. Greenberg’s lawyer, said, “Inaccuracy is not by itself wrongdoing.”
During the news conference, Mr. Smith said one of the two transactions, which inflated A.I.G.’s reserves by $500 million when investors were concerned about the company’s reserve levels falling, was done “for appearances” because an A.I.G. subsidiary had recently paid out heavy catastrophe losses, reducing reserves. But at the news conference, Mr. Smith, Mr. Greenberg’s co-defendant, denied deceiving investors.
David Schiff, a former insurance analyst who followed A.I.G. stock, said he believed the transactions in the case did “deceive investors about the true nature of the company’s balance sheet and operating earnings.” As for Mr. Greenberg, he said, “Just because he hasn’t pled guilty to fraud doesn’t mean he’s been vindicated.”
