Florida Seeking Answers from AIG
Florida's insurance regulator has ordered American International Group Inc. to disclose information about financial misrepresentations and fire those responsible.
If AIG does not comply, it faces the possibility of being barred from doing business in the state.
The Office of Insurance Regulation ordered AIG, and its 43 units operating in Florida, to hand over information on the nature and extent of misrepresentations on the company's financial statements, Reuters reported. It also required AIG to file accurate statements for the years 2000 through 2005 by July 1.
AIG spokesman Chris Winans told MarketWatch that the company intends to "comply with all our insurance regulators' requests, including those of the Florida Office of Insurance Regulation."
The Securities and Exchange Commission and the New York Attorney General's Office are investigating AIG for possible stock manipulation. The company has admitted to improper accounting practices, announced it would restate earnings to the tune of $2.7 billion, and ousted Chief Executive Officer Maurice “Hank” Greenberg. Chief Financial Officer Howard Smith and two other executives were fired, and the Wall Street Journal has reported that at least six others could lose their jobs over the accounting problems.
"They've basically admitted that the financial statements they've filed with state regulators are incorrect," Dennis Threadgill, chief assistant general counsel at the Florida Office of Insurance Regulation, told MarketWatch. "If they filed those statements knowing they were false then that is a crime."
He added: "They've removed some people involved and indicated that they've found others who may also be responsible. We've asked them to identify all these people and remove those who haven't already left the company.”
The state regulator can stop AIG from doing business in the state by revoking its license, a move that can be made if the insurer has filed false financial statements.
In another development, the New York Times reported Thursday that AIG's biggest stockholder, Starr International, a Panama-based private company, has been paying AIG executives bonuses amounting to tens of millions of dollars over two years. Under its own operating laws, Starr International was not eligible to make those payouts, the Times reported, citing court papers and internal AIG documents.
According to AIG's 2000 annual report, Starr is not supposed to set aside AIG shares for executives during any two-year period in its compensation plan when AIG does not report growth in earnings per share.
Because of claims stemming from the Sept. 11 terrorist attacks, AIG did not grow around 2000 and 2001, but Starr International set aside shares totaling $41.7 million, said court papers filed by the Teachers' Retirement System of Louisiana.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.