AIG drags 84-yr-old ex-chief to court for scam

The latest act in the drama of the American International Group opens on Monday when the ailing insurance giant takes....

The latest act in the drama of the American International Group opens on Monday when the ailing insurance giant takes its former chief executive to court,accusing him of plundering a trust that it says was set up to pay top performers.

AIG contends Maurice Greenberg,84,who ran the company for decades,unlawfully took $4.3 billion in stock in 2005,the year he was forced out as chief executive.

Greenberg and his lawyers say that those AIG shares owned by Starr International,a privately held company,of which he is chairman were not held in a trust at all. As Starrs chairman,they say,Greenberg had the authority to sell the shares and invest the proceeds in new offshore insurance businesses and in a new charitable arm.

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The government bailout of AIG occurred after the main events in the case,which revolve around the intricacies of trust and securities law. But the trial may delve into the broader questions of who is responsible for AIGs near collapse and whether,as chief executive of AIG,Greenberg was more preoccupied with financial maneuvers than with fostering sound risk management. For his part,he has accused the government of destroying a company that he nurtured.

Though Greenberg sold the $4.3 billion block of stock in 2005,long before the price crashed,he kept much of his personal fortune in AIG shares. When the government stepped in last fall,taking a 79.9 per cent stake in the company,Greenberg and other shareholders were essentially wiped out.

The dispute over the Starr International stock sale began with a complaint filed by Greenberg that AIG was holding an art collection that belonged to Starr. AIG countersued,denying Greenbergs accusations and saying he had promised to pay its employees hundreds of millions of dollars and needed to make good.