Hank Greenberg Admonished by Judge for Lack of Direct AnswersBy
New York trial might last a year, judge warns ex-AIG head
Decade-old lawsuit alleges Greenberg sought to hide losses
A New York state court judge warned Maurice “Hank” Greenberg, the 91-year-old former chairman of American International Group Inc., that his fraud trial might last a year unless he answered questions more fully.
The admonishment came during Greenberg’s second day of testimony, following repeated claims by the former AIG boss that he didn’t remember details of a 16-year-old business deal that prosecutors say was drummed up to hide the insurer’s financial condition from shareholders.
"If you don’t want this trial to last a year we will need direct answers," New York State Supreme Court Justice Charles Ramos, who is presiding over the case without a jury, told Greenberg.
Assistant Attorney General David Nachman spent most of the day questioning Greenberg about his relationship with Joseph Umansky, a former senior AIG senior vice president who cooperated with the government investigation. Greenberg and former AIG Chief Financial Officer Howard Smith are accused of concocting a scheme to shield more than $200 million of underwriting losses from a failed auto-warranty program and assigned Umansky to handle it.
Greenberg considered underwriting results to be the key measure of AIG’s success and sought to disguise those losses in order to preserve the company’s image, according to the lawsuit.
"The concept of converting underwriting losses to investment losses was intriguing to me," Greenberg testified. He said any such move would have had to have been approved by accounting experts and lawyers.
“It had to pass muster,” he said. “Until that happened, I was not interested."
During often-testy exchanges with Nachman, Greenberg denied dispatching Umansky to Switzerland to find investors for CAPCO Reinsurance Co. The Barbados-based company allegedly was used to offload the underwriting losses from the auto-warranty program.
Greenberg said Umansky didn’t report directly to him and was seeking business for the company "on the investment side."
"I had just come back from Switzerland and I said, ‘Why don’t you get in touch with some Swiss banks?’" Greenberg said when asked by Nachman if he helped move the project forward. "That was the extent of me helping him."
The attorney general has argued that Greenberg was so upset at the failure of the auto-warranty program that he got involved personally and directed Umansky to the president of a private bank in Switzerland controlled by AIG to find three "straw man" investors for CAPCO.
"What did you understand these investors were for?" Nachman asked. "What were they for? What was their purpose?"
"I have no idea," Greenberg said. "The lawyers and accountants structured it.”
The case is State of New York v. Greenberg, 401720-2005, New York state Supreme Court (Manhattan).