AIG lawyer Says ex-CEO Greenberg Lied in Court battle

Maurice "Hank" Greenberg, former chief executive of American International Group, fabricated documents and lied under oath in a bid to rewrite history and cloud who is the rightful beneficiary of a large and valuable block of AIG stock, AIG lawyer Ted Wells told a federal jury Monday.

AP Hank Greenberg

Wells, delivering closing arguments in a high-profile trial over rightful ownership of the stock, said Greenberg's assertions at trial that the beneficiary of the stock was always intended to be a charitable trust was no more than an attempt to cover up a pledge made 35 years earlier.

AIG contends Starr International, a private company that was once closely affiliated with the insurer, established a trust to fund a retirement plan in the 1970s.

But in 2005, Greenberg and other Starr International voting shareholders threw out the compensation plan within days of Greenberg's ouster from the insurer.

"What do they do when Greenberg is fired? They go out and rescind ... their oath. That is part of the cover-up," said Wells.

AIG is suing Starr to reclaim $4.3 billion of proceeds from stock sales and to wrest back 185 million other shares with the intention of bringing funding for the retirement plan in-house.

Wells pointed to a long trail of evidence established by Greenberg over nearly four decades as CEO, including videotaped speeches, memorandums, media interviews and a letter from audit firm PricewaterhouseCoopers to the Irish Tax Authority shown at trial, stating that the stock was always meant to fund the AIG executive retirement plan.

An eight-person federal jury has the task of deciding whether a trust that AIG claims was established to hold the shares to fund the executive retirement plan was breached, and whether Starr International unlawfully sold shares to fund investments in China, Russia and the United States.

Greenberg continued to run Starr International after he was fired from AIG amid an internal investigation into accounting practices at what was once the world's largest insurer. He took the block of AIG stock with him, worth more than $20 billion at one point.

David Boies, a lawyer for Greenberg and Starr International, told jurors that AIG, not his client, was the one guilty of fabrication.

"The truth is that AIG has made up (the trust) for the purposes of this litigation," said Boies. Boies continues his closing arguments Monday afternoon.

Judge Jed Rakoff ruled at the start of the trial three weeks ago that investigations surrounding Greenberg's ouster, the U.S. government's bailout and controversial bonuses to AIG executives could not be brought up at the trial, saying the matters were irrelevant to the case at hand.

AIG says, subject to approval, it would use the $4.3 billion it is seeking as damages to repay taxpayer debt from its bailout. Starr International maintains the proceeds of stock sales is a lower figure -- $2.9 billion.

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