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Ex-AIG chieftakes the Fifth,source says

The former chairman and CEO of embattled insurer AIG  invoked his constitutional rights against self-incrimination Tuesday, declining to answer questions from securities regulators, according to a person familiar with the meeting.
/ Source: The Associated Press

The former chairman and CEO of embattled insurer American International Group Inc. invoked his constitutional rights against self-incrimination Tuesday, declining to answer questions from securities regulators, according to a person familiar with the meeting.

The midmorning deposition of Maurice “Hank” Greenberg lasted about 45 minutes, according to the person, who spoke on condition of anonymity. Greenberg, who arrived and exited the building via an underground entrance, avoided commenting to reporters who had staked out the four street-level entrances to the building.

Greenberg and his lawyer had indicated on Monday that he would likely refuse to answer questions because he had not had sufficient time to prepare.

“He’s done,” said Howard Opinsky, a spokesman for Greenberg’s legal team. “I’m told it was quiet, cordial and professional. I do believe he invoked his Fifth Amendment rights, but don’t specifically know to what questions.”

Earlier in the day, regulators had said they still saw value in questioning Greenberg, despite the remote chance he would answer them.

“We have 40 pages of questions,” said Joseph Fritsch, director of insurance accounting policy for the New York State Insurance Department. “We want to get them all on the record.”

Fritsch said the government’s case was bolstered by testimony from billionaire investor Warren Buffett on Monday. According to Fritsch, Buffet confirmed “that Hank knew about the deal” between AIG and General Re Corp., a unit of Buffett’s holding company, Berkshire Hathaway Inc. That deal served to boost AIG’s cash reserves and appease investors and analysts, the government claims.

Fritsch said Buffett did not give prior approval for the transaction, leaving the decision-making to his subordinates. Buffett was “very easygoing” in answering regulators’ questions, Fritsch added.

Buffett had no comment on the substance of his testimony Monday. “I told them everything I know,” Buffett said afterward.

Greenberg has been identified by regulators as a target of their investigation and said he would not cooperate unless the Securities and Exchange Commission and the New York attorney general’s office narrowed the scope of their questions.

Greenberg lawyer David Boies said Monday the large number of transactions being examined and that fact that some occurred years ago “have precluded Mr. Greenberg from adequately preparing this testimony at this time.”

Greenberg sounded a similar note in a statement issued Monday afternoon, noting that AIG is involved in millions of transactions each year, many about which he had no direct knowledge.

“I am willing to accept responsibility and to account for the performance of my duties, but I believe that good order and fairness require that I have an adequate opportunity to be advised of the issues to be investigated and to my alleged involvement therein,” Greenberg said.

In a column in Tuesday’s Wall Street Journal, Boies said Greenberg had asked to postpone the questioning to allow for more time to review the documents in the case, and to limit questions to the General Re transaction. Both requests were denied, Boies said. Investigators also would not allow Greenberg to object to questions or allow him access to a transcript of the deposition, or to make his own.

Greenberg, 79, had viewed the forum as an opportunity to defend himself against “leaked charges” in the media, Boise wrote.

“On the other hand, the risk of being set up by open-ended questioning before he had an opportunity to review documents concerning events many years ago was great,” Boise wrote.

Fritsch said that if Greenberg invoked his Fifth Amendment rights, he might yet be subpoenaed again as regulators continue their investigation.

“We plan on calling other people in the organization (AIG),” Fritsch said, adding that new information could result in additional questions and a new subpoena for Greenberg.

Buffett spoke briefly to reporters Monday as he left the Woolworth Building in lower Manhattan, where the SEC has an office. Asked whether General Re turned over documents in exchange for leniency, Buffett said, “No. We complied with the subpoena.”

The investigators are looking into a number of reinsurance transactions, which involve insurance purchased by insurance companies like AIG. Reinsurance traditionally has been used to spread out risk among insurers but, in some cases, it has been used for the questionable purpose of polishing a company’s financial statements.

In the case under review, AIG purchased reinsurance from General Re in the fourth quarter of 2000 and first quarter of 2001. Investigators have said that AIG used the deals to pump up its reserves when markets were uneasy about the company’s outstanding liabilities.

AIG has said its accounting for the transactions with General Re “was improper and, in light of the lack of evidence of risk transfer, these transactions should not have been recorded as insurance.”