AIG Bonuses: Surrendered Under Pressure?
CNBC Chief International Correspondent
An email from the head of a controversial unit at AIG suggests employees who gave up their bonuses did not do so voluntarily, but feared their names would be released if they did not.
The email, obtained by CNBC, states the following: “Please be aware that we have received assurances from Attorney General Cuomo that no names will be released by his office before he completes a security review which is expected to take at least a week. To the extent that we meet certain participation targets, it is not expected that the names would be released, at all.”
The email, dated Friday March 20th, is from Gerard Pasciucco, the individual hired by AIG CEO Edward Liddy to wind down the controversial Financial Products division — the division which caused the near collapse of the global financial system — and was sent to employees of that division.
CNBC has confirmed the authenticity of the email contents, which also was reported by the Washington Post. An AIG spokesperson declined to comment. The attorney general’s office declined to comment.
New York Attorney General Andrew Cuomo announced late yesterday that 9 out of the top 10 bonus recipients at the American International Group agreed to give back their bonuses. And that 15 of the largest 20 bonus recipients in AIG’s financial products division had agreed to give back the money.
In a Monday night news conference with reporters the attorney general said that releasing the names would be in the interest of explaining to taxpayers how their money was used—and that if the money were returned, it would severely diminish if not extinguish the need to release the names.
When asked by the reporters if there was any implied threat in Cuomo's request the employees return the money he said, "I do not threaten, nor do I use strong language."
Cuomo praised the employees who returned the bonuses saying they "did the right thing" and set an example for the rest of the country.
Critics say the attorney general is practicing coercion. Roger Pilon of the Cato Institute called it "out and out extortion. The equivalent of a mugging. Your money or your life," making reference to reports that some of AIG employees had recieved threats.
However, Professor John Coffee, of Columbia University believes the attorney general is well within his rights because a court has already ruled that the employees of Bank of America and Merrill did not have a right to confidentiality. As for physical threats he called "speculative," and added "We haven't seen any credible threats that have required police protection. I'll admit, its a high price to pay for privacy."
— CNBC's Mary Thompson contributed to this report.