Nov 26, 2009 10:52 am US/Eastern
AIG Resolves All Legal Disputes With Greenberg
NEW YORK (CBS) ―
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The Pine Street headquarters of American International Group Inc. (AIG) in lower Manhattan is shown on March 23, 2009, after the troubled insurer took their name down over the weekend from the front of their Water Street building.
Timothy A. Clary/AFP/Getty Images
American International Group Inc. has agreed to settle all legal disputes with its former chairman Maurice "Hank" Greenberg, the company said late Wednesday.
The insurance company, which was bailed out by the government and is now owned by U.S. taxpayers, also resolved its complaints against former Chief Financial Officer Howard I. Smith. AIG said it will pay up to $150 million in past legal fees and expenses for both Greenberg and Smith. The agreement calls for the reimbursements to be reviewed by a third party.
Under the terms of the agreement, AIG will also return a Persian rug from the company's headquarters to Greenberg, as well as photographs of Greenberg with Chinese leaders in AIG's Shanghai building. Greenberg will also have access to AIG's archives to write his memoirs.
AIG had argued that a Greenberg-controlled investment firm owed it $4.3 billion to cover stock taken from an executive retirement fund. AIG claimed the fund was held in an oral trust for use by company employees. Greenberg argued he could sell the shares because they were controlled by his firm, Starr International.
AIG had also claimed that Greenberg and Smith owe part of the $1.6 billion the insurer paid to settle a range of issues with regulators including the Securities and Exchange Commission, Justice Department and New York Attorney General.
Greenberg was ousted from New York-based AIG amid an accounting scandal in 2005. The Securities and Exchange Commission charged both Greenberg and Smith with misstating the company's earnings.
AIG had agreed earlier this year to settle its disputes with Greenberg and Smith through arbitration. Around the same time in August, a judge had ruled that Starr International did not improperly seize the AIG stock from the retirement plan.
Mark Herr, an AIG spokesman, said the legal costs AIG reimburses Greenberg and Smith may be covered at least partially by insurance.
AIG went public in 1969.
(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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