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House Panel Seeks Confidential AIG Reports

April 2, 2009
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The chairman of the House Oversight and Government Reform Committee and the panel’s top Republican have asked federal authorities to provide the committee with confidential reports prepared by a lawyer who was hired by American International Group Inc. to monitor the insurer and provide periodic reports to federal regulators.

Letters requesting the documents were sent Tuesday, March 31, to the Department of Justice and the U.S. Securities and Exchange Commission by committee Chairman Edolphus Towns, D-New York, and Rep. Darrell Issa, R-California.

“With taxpayers now having an 80 percent stake in AIG, we believe that review of these reports is critical for Congress to better understand how AIG became financially crippled and in assessing whether taxpayer dollars are being properly used for the stabilization of this once-prosperous company,” Reps. Towns and Issa wrote.

The request involves a November 2004 deferred-prosecution agreement under which AIG was required to install an independent monitor to oversee business practices at the company, the congressmen said.

They said AIG hired James Cole, a partner in the Washington office of law firm Bryan Cave, in early 2005 and that his responsibilities broadened in November 2006 after a separate settlement required that he monitor and examine AIG’s financial reporting as well as provide oversight of corporate governance.

“Under the provisions of these settlements, Cole evidently had routine access to the highest levels of the company and participated as an observer at AIG board meetings,” the congressmen wrote. “In effect, Cole had a seat at the table as the company decided to oust two CEOs, developed its strategy in the midst of the housing bubble and its subsequent collapse, and made critical decisions concerning AIG Financial Products, allocating retention payments, generating options to produce liquidity, and ultimately requesting taxpayer capital injections from the Federal Reserve and Treasury now amounting to $180 billion.”

The committee is scheduled to hold the first in a series of hearings into the AIG situation on Thursday, April 2, with former AIG chairman and CEO Maurice R. Greenberg slated to testify.

Filed by Mark A. Hofmann of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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