A central issue in the vicious feud between Hank Greenberg, the octogenarian insurance industry legend, and AIG, the company he used to run, is finally getting an airing in a New York court, where the $4.3bn (£2.6bn) case began yesterday with a stern warning from the judge.
"This is a case about an alleged trust and an alleged conversion of valuable shares," Judge Jed Rakoff said. "It's not a forum for airing all of the innumerable other issues, most of which are resolved, regarding Mr Greenberg, Starr, AIG bonuses, investigations and what have you."
Judge Rakoff dismissed Mr Greenberg's request that issues surrounding the US government's bailout of AIG last autumn be presented as evidence. The only relevant issue, he said, is the status of Starr International, a company controlled by Mr Greenberg which has a history that interlocks with AIG's.
Mr Greenberg was forced out of AIG in 2005 in an accounting scandal. Before 2005, Starr's holdings of AIG shares had been used to pay bonuses to retiring executives, and AIG says the company is in effect an in-house trust. It accuses Mr Greenberg of, in effect, stealing $4.3bn from the company when Starr sold 290 million shares in the months after his resignation. If it wins the case, it is promising to use the proceeds to pay back billions of dollars to the US Treasury.
Mr Greenberg disagrees that AIG is a beneficiary of Starr, and says AIG made up the claim after Starr sued to get back $15m of artwork in AIG offices.Reuse content