AIG bonus row rekindled by $100m 'retention' plan

Employees of AIG's disaster-stricken derivatives business are drawing renewed political fire after reneging on promises to hand back a portion of last year's bonus, and amid news that they are just days away from receiving another $100m (£63m) in "retention payments".

The insurance firm, which is being propped up with $180bn of US taxpayer aid, says that it has recouped a total of $39m out of $45m originally promised when its bonus arrangements hit the headlines and caused a public outcry one year ago. Last year's bonus total for the 400 current and former employees was originally set at $168m, and this year's for $198m. About $100m was being distributed yesterday, ahead of schedule, and the final total remained murky.

Political reaction was sharp. Tim Geithner, the US Treasury Secretary, said the pre-bailout contracts used for these payments were "outrageous... They should have never been permitted."

The AIG derivatives business, which was known as the financial products group and which had its headquarters in London, was at the centre of the trading which brought down the firm, and almost brought down the financial system in 2008. Employees there had written hundreds of billions of dollars of insurance on mortgage-related bonds which AIG was unable to cover when those bonds lost their value.

Now under government control, the firm has been mired in controversies over pay, with furious infighting among staff, past and present. Many are holding out for the bonus payments to which they are contractually entitled, and executives fiercely resisted efforts by the Obama administration's pay tsar, Ken Feinberg, to limit future payments.

Mr Feinberg said he believed this would be the final controversy over pay at AIG. "It ends this March with the last of these retention payments. These are the old grandfathered payments," he told ABC television. "Another month or so, these old, guaranteed bonuses will be a thing of the past."

Late on Tuesday, AIG said it had found a replacement for its general counsel, Anastasia Kelly, who quit last year in protest at pay cuts. The company said it had hired Thomas Russo, who was one of the senior lawyers at Lehman Brothers when that firm collapsed two days before AIG in September 2008.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Pot of gold: tasting the world’s most expensive tea

Pot of gold

Tasting the world’s most expensive tea
10 best wildlife-watching experiences: From hen harriers to porpoises

From hen harriers to porpoises: 10 best wildlife-watching experiences

While many of Britain's birds have flown south for the winter, it's still a great time to get outside for a spot of twitching
Nick Easter: 'I don’t want just to hold tackle bags, I want to be out there'

'I don’t want just to hold tackle bags, I want to be out there'

Nick Easter targeting World Cup place after England recall
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore