| NEW YORK, Sept 29
NEW YORK, Sept 29 The New York judge weighing
whether ex-AIG chief Maurice "Hank" Greenberg should be liable
for accounting fraud on Thursday pressed the 91-year-old
executive about why AIG had created an offshore entity for
losses from a failed automotive warranty program.
Greenberg was on the stand for the third day for allegedly
engineering the offshore entity, known as Capco, to hide $200
million in underwriting losses from shareholders.
The transaction is one of two at the heart of a 2005 case
against Greenberg that finally went to trial two weeks ago after
years of legal wrangling.
Justice Charles Ramos of New York state court in Manhattan,
who is presiding over the non-jury trial, took over questioning
Greenberg from Assistant Attorney General David Nachman in an
effort to cut to the chase.
"There is no one in this room who doesn't think you're a
brilliant business manager and a rational person," the judge
said, noting there were no clear financial benefits to the
company from the Capco transaction. "Why would AIG go through
the Capco transaction in the first place? What was the
motivation for that?"
Greenberg responded that the transaction was designed to
help AIG managers by taking off their books so-called run-off -
years of leftover claims from a shut-down auto warranty program.
"They were arguing they shouldn't be held accountable for the
runoff," he testified.
"They didn't want this negative?" Ramos asked.
"Right. That was the only reason," said Greenberg.
Because the exchange was hard to hear, Ramos summarized
Greenberg's testimony to the courtroom.
"And if the shareholders are deceived, that's their
problem?" Nachman interjected, drawing an objection from David
Boies, Greenberg's attorney.
Nachman then went back to questioning Greenberg, while Ramos
urged him to move more quickly.
New York Attorney General Eric Schneiderman is seeking to
recoup some $50 million in bonuses paid to Greenberg and his
co-defendant, former AIG Chief Financial Officer Howard Smith.
He also wants to bar them from the securities industry and from
being officers and directors of public companies.
Greenberg still heads C.V. Starr, a private insurance
The trial is adjourned until Tuesday, when Greenberg is
expected to testify about the other transaction in the case: a
$500 million deal that allegedly inflated AIG's reserves.
Greenberg led AIG for four decades before he was ousted in
2005. The following year, the insurer paid $1.64 billion to
settle federal and state probes of its business practices.
(Reporting by Karen Freifeld; Editing by Dan Grebler)