Fri, Oct 17, 2008 - Page 7 News List

AIG uses taxpayer money to fund executive retreats

AP , CHARLOTTE, NORTH CAROLINA

First there was the US$440,000 American Insurance Group Inc (AIG) spent entertaining executives days after receiving an US$85 billion lifeline from the US Federal Reserve, now it’s US$86,000 for a hunting trip in England as the faltering firm reaped another US$37.8 billion in taxpayer-funded loans.

News of the hunting trip emerged on Wednesday as New York Attorney General Andrew Cuomo ordered AIG to do away with golden parachutes for executives, golf outings and parties while taking government money to stay afloat.

“Even after the taxpayer-funded bailout of AIG, the company paid hundreds of thousands of dollars for luxurious retreats for its executives, including an overseas hunting party and a golf outing,” Cuomo wrote in a letter to the New York state-based insurer.

He said the spending could be “fraudulent conveyances” under a state law regarding debtors and creditors and noted that beyond those excesses, millions were paid to executives who were running AIG as it faced dissolution with government help.

Cuomo said he has the power under state business law to review and possibly rescind any inappropriate AIG spending as long as the Fed is propping up the huge insurer with almost US$123 billion in loans announced since Sept. 16.

AIG officials said the hunting trip in the English countryside was an annual event for customers that had been planned months before the bailout. It pledged — as it did following the trip last month — to do everything possible to end such extravagances. They declined to say which AIG executives attended.

“This was an annual event for customers of the AIG property casualty insurance companies in the UK and Europe, and planned months before the Federal Reserve Bank of New York’s loan to AIG,” company spokesman Peter Tulupman said on Wednesday morning, adding: “We regret that this event was not canceled.”

Later on Wednesday, AIG said: “We will continue to take all measures necessary to ensure that these activities cease immediately. AIG’s priority is to continue focusing on actions necessary to repay the Federal Reserve loan and emerge as a vital, ongoing business.”

Last week AIG said it would stop “all nonessential conferences, meetings and activities that do not clearly maximize value and service given the current conditions.”

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