Who is Pulling Strings at AIG?

Barely a month after Eli Broad and two other large shareholders demanded a change in AIG's management and board, we not only have a new CEO in Robert Willumstad but an outstanding new director with considerable financial experience. More striking and puzzling at first glance, however, is the director who suddenly and immediately resigned, offering no explanation.

Suzanne Nora Johnson retired from Goldman Sachs as Vice Chairman after two decades, a period during which she headed the Global Investment Research Division. She is on several corporate boards, including Pfizer and Visa. She will bring much needed financial expertise to AIG.

Much more tantalizing is the sudden resignation of Richard Holbrooke, former U.S. Ambassador to the United Nations. I say this because there are very hostile feelings between Hank Greenberg, the former CEO and Holbrooke, relating to Greenberg's forced retirement. One could speculate--and it is pure speculation--that as part of the olive branch Willumsted held out to Greenberg when he visited him a few days after being elected CEO was that he would get rid of Holbrooke.

This sounds farfetched considering the hostility that has existed between Greenberg and AIG, but Greenberg himself said on television after his meeting with Willumsted that he wanted to be helpful and suggested efforts were underway to resolve one of the two demands I expected Greenberg to make -- the long pending lawsuit between AIG and Starr International over the latter's holding of 12% of AIG stock.

Greenberg probably had bad feelings toward a number of board members but especially, for whatever reason, Holbrooke. And I speculated the second demand was to make some changes in the Board.

If we carry this scenario to its' logical conclusion, then, as part of the Willumsted-Greenberg deal, Greenberg is providing advice on what to do to turn around AIG. That is by far the most valuable help he could give the company and it is in his interest as the largest shareholder. Obviously, it is equally helpful to Willumstad since a revived AIG offers him the guarantee of a long future as AIG CEO.