Stephen Foley: The end of a petty quest for revenge
Saturday 28 November 2009
US Outlook: The fact that Hank Greenberg is getting back a Persian rug and some photos of him meeting Chinese leaders, as part of his ceasefire with AIG, tells you all you need to know about the insurance industry's most pathetic feud.
Their legal settlement stipulates that AIG must no longer be "disparaging" of its former chief executive. So allow me.
The pettiness with which Mr Greenberg has pursued revenge on the insurer that ousted him in 2005 has irreparably tarnished his reputation. It was galling enough to watch AIG having to take him so seriously in the years before its collapse; since the insurer was nationalised in last year's financial panic, his continued haunting of the company has been beyond the pale. Infuriatingly, AIG is going to pick up Mr Greenberg's $150m legal bill, using money which by rights should be diverted to the US taxpayer, to which AIG is in hock to the tune of $180bn.
At 84, Mr Greenberg is super-humanly fit and as competitive as ever. He plays tennis, lifts weights and speaks in military metaphors, as befits someone whose own service included taking part in the D-Day landings. He ran AIG as a dictatorship. Such aggression can take you so far – very far, he proves – but it can also unhinge you.
There's no quibbling with Mr Greenberg's mammoth achievement in 45 years, turning AIG from an unknown Asia-focused insurer into the largest on the planet. I understand, too, why some people feel he was hard done by when, at the height of Eliot Spitzer's campaign against Wall Street, he was forced out amid a $2bn accounting scandal for which he was ultimately never charged with criminal wrongdoing. He did pay $15m this year to settle the remaining minor civil case with the Securities and Exchange Commission, though, and did so with his usual bad grace, arguing most of the accounting restatements had been unnecessary.
Mr Greenberg's campaign of revenge against the board that voted to oust him, his public rubbishing of his successor, Martin Sullivan (who he anointed), and his legal campaign for compensation were unbecoming of the insurance industry's elder statesman.
The two sides fought over the ownership of boardroom trinkets, such as the rug and artworks. He sued when the share price went down, claiming management misled him. There were tit-for-tat suits over the ownership of $4.3bn in AIG shares. To call him a "distraction" isn't the half of it.
While AIG's credit derivatives insurance business was spinning out of control, managers had to spend time and money dealing with Mr Greenberg's interventions. He repeatedly signalled to journalists that he would launch a shareholder vote to take back control of the company, but never did. Ludicrously, at the height of last year's panic, when AIG was already done for and negotiating its government bailout, he emailed the company to suggest he buy it.
Mr Greenberg has behaved since last year as if the collapse of AIG is vindication for him, proving he shouldn't have been let go. I can't count the times that I have heard investors, analysts and writers assert that the firm would be a picture of health today under his continued leadership and before Congress this spring, he claimed he would never have allowed the financial products group to swell to such a size.
There's no way to know, of course, but I am sceptical. In three years of whingeing about the management of AIG after his ouster, I can't find any sign of Mr Greenberg having raised that particular alarm. He never hedged any of those toxic credit default swap positions when he was at the helm, what's to make us think he would have started? When in the spring he was warning of a "crisis" at the company, he spent as much time talking about the management of the general insurance businesses he knows best.
No doubt this week's settlement has been possible because Bob Benmosche, AIG's latest chief executive and an aggressive character in the Greenberg mould, has been better at massaging the billionaire's enormous ego. It is undoubtedly the right thing to have done, but it leaves a horrible taste in the mouth all the same.
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