Jeffrey Greenberg, the chief of scandal-beset Marsh & McLennan, resigned yesterday in the wake of a civil lawsuit filed by New York's attorney general, Eliot Spitzer, accusing the company of fraud and bid-rigging.
The full board of the world's largest insurance brokerage company convened behind closed doors in Manhattan to discuss its response to the action. Mr Greenberg will be replaced as chief executive by Michael Cherkasky, the head of Marsh Kroll, the company's risk and insurance services unit.
The fate of Mr Greenberg, 53, was all but sealed at the end of last week when Mr Spitzer, who has made the insurance industry the latest target of his crusade to clean up the financial services sector, made clear that he would not enter talks with the company unless it first jettisoned him. He told its board to "think very long and very hard about the leadership" of the company.
Even before yesterday, the company had fired several senior executives, including its insurance brokerage head, as it scrambled to address the scandal. Above all, the board is determined to deter Mr Spitzer from filing criminal charges.
Shares in Marsh ended down 37 cents at $26.42, leaving them 43 per cent down since Mr Spitzer filed the suit on 14 October.
At the heart of the suit is the charge that Marsh & McLennan had for years demanded commissions, or kick-backs, when it helped insurance companies land business with major corporations. The practice, considered illegal by Mr Spitzer, appears to have been entrenched in the industry, costing customers $3bn last year alone.
As Mr Spitzer, who is expected to make a run for the New York governorship in 2006, expands his investigation, large customers are expected to file their own suits to try to recoup money spent to support the fees.Reuse content