New York Attorney General Andrew Cuomo said on Monday that his office is issuing subpoenas against AIG to obtain the list of the recipients of bonuses revealed over the weekend, along with copies of their employment contracts. Over the weekend, AIG, which has received about $170 billion in government guarantees, said it will soon pay about $165 million in employee bonuses, because of contractual obligations. "I want the contracts, I want the names, I want the amounts, I want the circumstance," said Cuomo, speaking to CNBC. "This is taxpayer money and taxpayers are entitled to accountability, transparency and disclosure." In addition to being required to pay the bonuses because of past employment contracts, AIG CEO Edward Liddy said the company cannot attract and retain strong employees if they believe the federal government will decide their salaries. On Monday morning, Cuomo sent a letter to AIG (see below) asking for information on the bonuses by the close of the markets. At 4:00 pm, Cuomo said no information had been provided, so his office was moving forward with subpoenas.
March 16, 2009
Edward M. Liddy,
Chairman & CEO
American International Group, Inc.
70 Pine Street New York, NY, 10270
Re: AIG Compensation InvestigationDear Mr. Liddy:
The Office of the New York Attorney General has been investigating compensation arrangements at AIG since last Fall. We were disturbed to learn over the weekend of AIG's plans to pay millions of dollars to members of the Financial Products subsidiary through its Financial Products Retention Plan. Financial Products was, of course, the division of AIG that led to its meltdown and the huge infusion of taxpayer funds to save the firm. Previously, AIG had agreed at our request to make no payments out of its $600 million Financial Products deferred compensation pool.
We have requested the list of individuals who are to receive payments under this retention plan, as well as their positions at the firm, and it is surprising that you have yet to provide this information. Covering up the details of these payments breeds further cynicism and distrust in our already shaken financial system.
In addition, we also now request a description of each individual's job description and performance at AIG Financial Products. Please also provide whatever contracts you now claim obligate you to make these payments. Moreover, you should immediately provide us with a list of who negotiated these contracts and who developed this retention plan so we can begin to investigate the circumstances surrounding these questionable bonus arrangements. Finally, we demand an immediate status report as to whether the payments under the retention plan have been made.
We need this information immediately in order to investigate and determine: (l) whether any of the individuals receiving such payments were involved in the conduct that led to AIG's demise and subsequent bailout; (2) whether, as you claim, such individuals are truly required to unwind AIG Financial Product's positions; (3) whether such contracts may be unenforceable for fraud or other reasons; and (4) whether any of the retention payments may be considered fraudulent conveyances under New York law.
Taxpayers of this country are now supporting AIG, and they deserve at the very least to know how their money is being spent. And we owe it to the taxpayers to take every possible action to stop unwarranted bonus payments to those who caused the AIG meltdown in the first place.
If you do not provide this information by 4:00 p.m. today, we will issue subpoenas and seek, if necessary, to enforce compliance in court.Andrew M. Cuomo
Attorney General of the State of New Yorkcc: AIG Board of Directors
