Hank Greenberg, Lucky and Well-Lawyered, Beats the SEC
Maybe he's no spring chicken, but even at 84 former American International Group Chairman and CEO Hank Greenberg is still more than a match for the Securities and Exchange Commission. He got off with little less than a slap on the wrist for allegedly cooking the books at his former company, which canned him in 2005.
After a tedious and contentious four-year investigation, the SEC fined Greenberg $15 million. Considering his vast resources, that won't put a dent in his jet setting lifestyle. He remains the head of his own company, C.V. Starr & Co., which he likes to call an investment fund, but which also dabbles in insurance just enough to annoy his former AIG colleagues.
In its statement announcing the settlement, the SEC made noises to the effect that it had really gotten Hank this time. Greenberg was involved in "numerous improper accounting transactions" that inflated AIG's earnings from 2000 to 2005, said the SEC.
But in his rebuttal afterwards, Greenberg brushed off the SEC, saying that he did not admit to any of the charges and indicated that he paid so he could "move forward with his life without the ... distraction of this lawsuit."
The numbers tell the true story. Greenberg paid $15 million to settle his accounting charges, while in 2006 AIG paid $1.6 billion to settle its suits resulting from the same charges. And after a disaster at the Financial Products unit that Greenberg set up and staffed, the taxpayers, who now own 80 percent of AIG, could pay up to $182 billion if the company's financial headaches get bad enough.
Greenberg should thank his lucky stars for his attorney, the famous David Boies, who, among other things, represented Al Gore in his bid to overturn the 2000 presidential election and helped CBS beat a libel suit filed by Gen. William Westmoreland. Greenberg and Boies have had a banner year. Not only did the SEC throw in the towel, but Hank won a lawsuit against AIG last month, allowing him to keep what's left of the $4.3 billion of AIG stock he took with him when he left.
Greenberg can certainly afford the $15 million fine.