The former CEO of American International Group (AIG) will not face criminal charges initiated by New York Attorney General Eliot Spitzer. Spitzer may continue to pursue civil charges against Greenberg with an amended civil complaint containing new information. The civil suit is primarily based on AIG’s misuse of finite reinsurance polices that concealed reserve issues from AIG’s balance sheet, according to TheStreet.com.
“The office decided months ago to pursue the case as a civil matter,” Spitzer spokesman Darren Dopp told USA Today. “An amendment to the civil complaint is possible, but no final decision has been made.”
In an additional statement made to Bloomberg, Dopp said, “It has to do with intent, the strength of the evidence and applicable laws.”
Greenberg is also facing investigations by the U.S. Department of Justice and the U.S. Securities and Exchange Commission, according to USA Today and Bloomberg. These investigations focus on AIG’s stock buyback program, initiated to increase their stock price, according to TheStreet.com. Fraudulent accounting practices that understated liabilities are also alleged, USA Today reports.
Greenberg has denied any wrongdoing regarding these allegations on several occasions.
AIG’s case is complicated by two former General Re executives who pled guilty to federal criminal charges that they aided in the manipulation of AIG’s financial results. Bloomberg reports that AIG took on no risk in facilitating a deal with the reinsurance giant General Re designed to boost the company’s reserves by $500 million. Analysts allegedly prompted this transaction out of concern for an expected reserves shortfall. General Re is the largest U.S. reinsurer and a subsidiary of Berkshire Hathaway Inc.
AIG is in the process of restating five years of financial results to redress errors stemming from the company’s reinsurance accounting. In adjustments made in May, the past five years of earnings decreased by $3.9 billion, according to Bloomberg. USA Today reported that adjustments made in early November boosted the company’s retained earnings by some $490 million over their initial September 30 statement. TheStreet reports that AIG’s third quarter earnings dropped 36 percent as a result of the devastating Gulf hurricanes over the summer.