Since his ouster as CEO of American International Group in 2005 amid money mismanagement claims, Maurice “Hank” Greenberg and his former employer have been at odds, often clashing in court.
But for the foreseeable future, the parties have agreed to settle their disagreements in private.
Maurice "Hank" Greenberg
AIG, Greenberg and the insurer’s former chief financial officer, Howard I. Smith, issued a joint statement Aug. 31 indicating all parties have agreed on terms for binding arbitration of their various legal disputes. The arbitration will begin no later than Oct. 15 and end by March 31, 2010, according to the terms of the agreement.
The arbitration will cover AIG’s derivative suit against its former executives, which combined various shareholder suits against the pair, according to published reports, as well as a dispute over C.V. Starr & Co, where Greenberg serves as chairman and CEO.
“The parties have concluded that it is preferable to resolve as many of their disputes as possible in a private setting, and in a more expeditious and cost-effective manner,” the joint statement read.
AIG, under the new leadership of Robert Benmosche as CEO and Harvey Golub as chairman, is in the midst of working to repay the government and American taxpayers billions in bailout money to save its operations.
The arbitration agreement comes after two significant events in recent weeks.
The first is the growing relationship between Benmosche and Greenberg. Both men recently told Reuters that they have been in contact with Greenberg indicating that he wanted to settle outstanding litigation with AIG.
The second is a decision by U.S. District Court Judge Jed Rakoff issued prior to the arbitration agreement becoming public to uphold a jury’s July decision against AIG. The insurer sought $4.3 billion in assets over Greenberg’s new company, which it claims was a subsidiary to run an executive-compensation fund and owned by AIG and not Greenberg, who claimed the company upon his departure from the insurer in 2005.
Rakoff could have overturned a jury verdict in favor of Greenberg, but did not, indicating that AIG should have clearly spelled out the intent of the Starr division in writing rather than the oral agreement it had with Greenberg, according to published reports.
AIG, Greenberg agree to arbitration to settle ongoing disputes via IFAwebnews .