Sunday, May 25, 2008

Hank Greenberg's Trials

My first few days in London was swamped with bad news from the U.S., at least for those who are fans of Hank Greenberg, former CEO of AIG. On Monday, word came at three a.m. London time that the judge presiding over the trial of four General Reinsurance executives and former AIG executive Chris Milton (who now works for C.V. Starr), had issued a long commentary on the trial. U.S. District Judge Christopher F. Droney denied defendants their appeal to overturn their convictions and have a new trial. He also said that there was sufficient evidence that Mr. Greenberg had instigated a telephone call that led to the conspiracy to fradulently boost the financials of AIG. This led to the conviction of the five executives. Greenberg's was named in the trial as an unindicted co-conspirator. Interesting enough, executives in London were not aware of this development.

During the three years since Hank Greenberg left AIG he has never faced a trial. I, for one, do not think this time will be any different. Consider the history: first, Greenberg was called a criminal on TV by then Attorney General Eliot Spitzer. And when Spitzer did bring charges against Greenberg and former AIG CFO Howard Smith, as well as separately against AIG, these were civil charges--not criminal. So the very allegation that cost Greenberg his job was not raised again until three years later when Judge Droney made his accusation. True the federal authorities talked about doing something with that charge from time to time. But they did not.

Even though the prosecutor said something after winning the trial about "working up the ladder", I am not convinced they have a scintilla of evidence that would lead them to do so and gain a conviction. Hopefully, this will put this matter to bed once and for all.

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