Insurer Balks at Paying Fines For Xerox Executives

An insurance carrier, which provides directors & owners insurance to Xerox Corp., has refused to reimburse the company for the $19.4 million in federal fines levied against six former executives involved in last year’s accounting scandal.

The insurer, a division of American International Group Inc., is asking a state court in New York City to declare that Xerox obtained its policies under false pretenses. AIG contends that Xerox "misrepresented the company’s financial condition and outlook," the Rochester, N.Y. Democrat and Chronicle reported Tuesday.

"We are quite disappointed that AIG would take such an aggressive action against a policyholder," Xerox spokeswoman Christa Carone told the newspaper. "We believe strongly that the case has no merit and that AIG is trying to avoid honoring its contractual commitments." AIG had no comment on the pending litigation.

The dispute stems from the 2002 settlement of a Securities and Exchange Commission investigation into the company’s accounting practices. Xerox agreed to pay a $10 million fine and restate several years of financial statements. Also fined were former Chairman Paul Allaire, former Chief Executive G. Richard Thoman and former Chief Financial Officer Barry Romeril.

Xerox said its bylaws required it to pay nearly all the executives’ fines — some $19.4 million of $22.5 million — which the company expected would be reimbursed by the AIG policies protecting Xerox directors and officers.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.