Begin forwarded message:
From: dasg...@aol.com
Date: March 16, 2009 3:00:09 PM PDT
To: ramille...@aol.com
Cc: ema...@aol.com, j...@aol.com, jim6...@cwnet.com,
l...@legitgov.org, countd...@msnbc.com
Subject: A Look Back at When & How AIG Arranged for Its Biggest Crooks
to Get Fat Bonuses
After Bailout, AIG Executives Head to Resort
October 7, 2008
http://voices.washingtonpost.com/economy-watch/2008/10/after_bailout_aig_executives_h.html
Less than a week after the federal government offered an $85 billion
bailout to insurance giant AIG, the company held a week-long retreat
for its executives at the luxury St. Regis Resort in Monarch Beach,
Calif., running up a tab of $440,000, Rep. Henry Waxman (D-Calif.)
said today at the the opening of a House committee hearing about the
near-failure of the insurance giant.
Showing a photograph of the resort, Waxman said the executives spent
$200,000 for rooms, $150,000 for meals and $23,000 for the spa.
"Less than a week after the taxpayers rescued AIG, company executives
could be found wining and dining at one of the most exclusive resorts
in the nation," Waxman said. "We will ask whether any of this makes
sense. "
The committee will ask the company's executives about their
multimillion-dollar pay packages -- some of which they continue to
receive -- as well as who bears responsibility for the company's high-
risk investment portfolio, which led to its near collapse just weeks
ago.
"They were getting their manicures, their pedicures, massages, their
facials while the American people were paying their bills," thundered
Rep. Elijah E. Cummings (D-Md.), of the executive retreat at the
Monarch Resort.
The House committee, which took on executive compensation at bankrupt
Wall Street firm Lehman Brothers yesterday, has received "tens of
thousands" of pages of documents from AIG, Waxman said.
Those documents show that as the company's risky investments began to
implode, the company altered its generous executive pay plan to pay
out regardless of such losses.
AIG lost over $5 billion in the last quarter of 2007 due its risky
financial products division, Waxman said. Yet in March 2008, when the
company's compensation committee met to award bonuses, Chief Executive
Martin Sullivan urged the committee to ignore those losses, which
should have slashed bonuses.
The board agreed to ignore the losses from the financial products
division and gave Sullivan a cash bonus of over $5 million. The board
also approved a new compensation contract for Sullivan that gave him a
golden parachute of $15 million, Waxman said.
Joseph Cassano, the executive in charge of the company's troubled
financial products division, received more than $280 million over the
last eight years, Waxman said. Even after [Sullivan] was terminated in
February as his investments turned sour, the company allowed him to
keep up to $34 million in unvested bonuses and put him on a $1 million-
a-month retainer. He continues to receive $1 million a month, Waxman
said.
Waxman also looked skeptically at the executives' defense that the
troubles in the business had to do with larger economic forces and not
their own bad decisions.
When former AIG auditor, Joseph St. Denis, expressed concerns, Cassano
told him "I have deliberately excluded you ... because I was concerned
that you would pollute the process," according to Waxman. St. Denis
resigned in protest.
PricewaterhouseCoopers, AIG's auditor, told the company in March 2008
that the "root cause" of AIG's problems was that people assessing risk
did not have enough access to the financial products division, where
the risky investments originated.
Waxman further suggested that Sullivan had deliberately misled
investors.
On Dec. 5, 2007, Sullivan expressed confidence to investors. But a
week before, PricewaterhouseCoopers warned Sullivan that the company
"could have a material weakness relating to these area," committee
members said.
Feeling the pinch at the grocery store? Make dinner for $10 or less.