Last Friday the New York attorney general’s office announced a $9 million settlement in a 12-year-old accounting-fraud case against Greenberg. In a press release, Schneiderman’s office proclaimed that Greenberg “admits to initiating, participating and approving two fraudulent transactions committed by AIG while CEO.”
On Monday the 91-year-old Greenberg called a press conference in which he angrily objected to describing any activities as “fraud” and insisted he did not admit any wrongdoing. So what did he admit to? In a statement issued Friday by the attorney general’s office, Greenberg acknowledged that the transactions in question “inaccurately portrayed the accounting and, thus, the financial condition” of AIG.
If transactions that paint an inaccurate picture of a company’s financial condition aren’t fraudulent, what are they? Greenberg’s legal team, led by super lawyer David Boies, clearly took great pains to ensure the word “fraud” appeared nowhere in his formal statement and were furious when Schneiderman’s public relations team dropped the f-bomb.
The case that Greenberg continued to fight Monday, despite the fact that it was settled last week, was brought in 2005 by then-Attorney General Eliot Spitzer. Greenberg has since filed a defamation suit against Spitzer for comments he made about the case after leaving office, and he seemed to want to sue Schneiderman, too, but noted that he’s unable to bring a defamation case against a standing attorney general. His only recourse, at least for now, was to call a press conference.
In a statement, a spokesman for Schneiderman said, “Mr. Greenberg’s admission speaks for itself: Mr. Greenberg initiated, participated in and approved two transactions that fundamentally misrepresented AIG’s financial performance to shareholders. No number of press conferences or TV interviews by Mr. Greenberg or Mr. Boies is going to change that fact.”
Greenberg was ousted from AIG in 2005, after the accounting scandal erupted. He led the company for nearly 40 years, and one of business history’s great what-ifs is whether the insurer would have avoided collapse in 2008 had Greenberg remained in charge. Greenberg now runs a much smaller insurer called Starr Cos. and was asked Monday if he called the press conference to protect his reputation.
“I haven’t thought about my legacy,” he claimed, but he wasn’t under oath when he said it.