TRENTON,
NJ -- Attorney General Anne Milgram announced
today that New Jersey and 10 other states
have asked the Special Inspector General for
the Trouble Asset Relief Program in Washington,
D.C., to pursue unresolved questions surrounding
bonuses paid to American International Group
Inc. executives last winter. These executives
were in the AIG unit responsible for investments
that led to staggering losses and a multi-billion
dollar federal bailout to avert the company’s
collapse.
Milgram
said a state investigation launched in March
into the bonuses paid to executives in AIG’s
Financial Products Unit has reinforced concerns
about the propriety of AIG’s actions
regarding bonus payments and retention bonuses.
The bonuses were paid after AIG received $180
billion in taxpayer funds to keep AIG afloat.
The
state investigation has confirmed that taxpayer
money was used to enable bonuses to executives
in AIG’s Financial Products Unit who
were involved in AIG’s derivatives business,
but AIG has not been clear on how many executives
have returned bonuses or whether $165 million
in bonuses were returned in full or only in
part. It is also unclear how much in additional
bonuses will be paid next year.
Milgram
said since the Inspector General’s Office
expanded an investigation into the bonuses
soon after the states launched their probe,
it was best to avoid regulatory duplication
that might drain federal taxpayer funds. The
United States has invested at least $180 billion
in AIG and now owns 80 percent of the company.
In this context, she said state regulators
decided to collaborate with the federal probe
because the federal Inspector General indicated
he would look into inconsistent statements
about the size of bonus payments.
In
a letter to Neil M. Barofsky, the Special
Inspector General for the TARP program, Milgram
asked for a meeting to “discuss ways
state regulators can assist in assuring that
its investors’ interests are addressed
while avoiding regulatory duplication that
might drain federal taxpayer dollars. Such
state-federal collaboration is especially
important here, given that the American taxpayer
owns most of AIG.”
She
said the states were concerned with the “candor”
of some of AIG’s responses about the
proportion of its TARP payments allocated
to its compensation program. In one instance,
a member of Congress was told in March that
AIG paid $120 million in company-wide bonuses,
but in May AIG quoted a figure of $454 million.
“AIG
claims the discrepancy is explained by Congress’s
failure to pose the March compensation question
with sufficient precision,” Milgram
wrote in her letter to the Inspector General.
“Such half-truths, which investors may
have relied upon, obviously raise serious
questions about the completeness of AIG’s
characterization of its financial condition.”
Joining Milgram in the letter to Inspector
General Barofsky were attorneys general from:
Arizona, Delaware, Illinois, Kentucky, Maine,
Michigan, Mississippi, New Mexico, Ohio, and
Texas.
In
March, Milgram announced an investigation
into potential state law violations by AIG
in connection with bonuses paid to employees
working in AIG’s Financial Products
subsidiary.
The investigation has centered on whether
compensation was paid to those working in
the AIG subsidiary largely responsible for
the financial crisis at the company and resulted
in the loss of billions of dollars in shareholder
equity, necessitating the huge influx of taxpayer
money.
Milgram
said the states wanted to ensure the investing
public that money received by AIG was used
to improve the financial welfare of the company,
“not pad the pockets of the same individuals
who led to the financial crisis in the first
place.”
“We
want to collaborate with the TARP Inspector
General to ensure as much of this money is
returned to the federal government as possible,’’
she said.
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