Attorney General tells AIG: 'The party's over'
Thursday 16 October 2008
The New York Attorney General, Andrew Cuomo, has launched a legal broadside against AIG, saying that the nationalised insurance giant has squandered money on luxury breaks for executives, including an overseas hunting trip and golf sessions.
He has sent a cease-and-desist letter to the company, declaring that "the party's over" and saying he believed that $54m (£31.4m) in bonuses and "golden parachute" payments to ousted executives had violated state law.
The legal assault puts new heat on AIG, which was effectively nationalised by the federal government last month, after hundreds of billions of dollars of unregulated bets in the derivatives markets took it to the brink of bankruptcy.
The company exists now only thanks to $123bn of bridging loans from the government, while it tries to sell off its profitable traditional insurance businesses.
AIG is fast becoming one of the most potent symbols of the excesses of unregulated Wall Street, and its former executives are facing mounting legal scrutiny. The Securities and Exchange Commission and the FBI are investigating whether they told the truth to investors as losses at the derivatives business spiralled out of control.
Shortly after its bailout, it was revealed AIG's top sales people were treated to $23,000 of spa treatments and $7,000 of golf outings at a $440,000 getaway in the swanky California retreat of St Regis Resort, Monarch Beach. Last week it cancelled a similar event at the $400-a-night hotel.
Mr Cuomo wrote to management yesterday saying pre-nationalisation spending may have violated New York law, if it is ruled "unwarranted and outrageous".
AIG replied it would cooperate with the investigation, and added that it had issued orders to end all activities that weren't essential to the conduct of its business.
- 1 Replica Back to the Future Hoverboard released
- 2 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 3 Brixton squat flats now costing up to £3k per month show how out of control rent is in London
- 4 Gamers confess the worst things they've done in The Sims
Costa Concordia: Shipment of Mob drugs was hidden aboard cruise liner when it hit rocks off Italian coast, investigators say
Brixton squat flats now costing up to £3k per month show how out of control rent is in London
Iran nuclear talks: Prospect of deal with Iran pushes Saudi Arabia and Israel into an unlikely alliance
A new (old) cure for MRSA? Revolting recipe from the Dark Ages may be key to defeat infection
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...
£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...
Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...
£150 - £190 Daily Rate: Sheridan Maine: One of London's leading water supplier...