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AIG, the giant insurance firm that received a massive taxpayer-funded bailout, then made headlines for handing out “golden parachutes” to its top executives and then had a $400,000 junket has promised to recover the funds paid to those execs, cancel perks, and initiate reforms – but only after New York Attorney General Andrew Cuomo threatened legal action.
AIG isn’t the only company Cuomo’s office is tackling, but the attorney general refused to give specifics during a telephone press conference, saying only, “I can’t say at this time.”
According to the negotiations between Cuomo and AIG’s new chief executive, Edward Liddy, the insurance giant will provide a complete accounting of all executive compensation and will assist in the recovery of those monies. Said payments include, “all forms of compensation paid to former CEO Martin Sullivan and the former head of the (AIG) Financial Products Unit, Joseph Cassano.”
In addition, departing chief financial officer Steven Bensinger will likely not be receiving his $10 million compensation package, though an official outcome is still pending. All further junkets and perks not justified by “legitimate business needs” have also been canceled, resulting in the cancellation of more than 160 conferences and events and representing a savings of more than $8 million.
AIG nearly went broke last month because of losses in the credit default underwriting division of the business, and received a rescue package of $85 billion from the United States government, which was later increased to $123 billion, in the form of loans intended to give the company time to sell off assets and repair its financial standing.
Andrew Cuomo assured, “The contracts will be illegal if we find that it is unjust compensation paid to an employee, severance package, bonus, stock options of an undercapitalzed company” He added, “You had senior management who were rewarded with multimillion-dollar bonuses for good performance. How can you pay so much for good performance when their performance was anything but?”