Judge takes over questioning ex-AIG chief Hank Greenberg

Thu Sep 29, 2016 8:49pm EDT
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By Karen Freifeld

NEW YORK (Reuters) - The New York judge weighing whether ex-AIG chief Maurice "Hank" Greenberg should be liable for accounting fraud on Thursday pressed the 91-year-old executive about why AIG had created an offshore entity for losses from a failed automotive warranty program.

Greenberg was on the stand for the third day for allegedly engineering the offshore entity, known as Capco, to hide $200 million in underwriting losses from shareholders.

The transaction is one of two at the heart of a 2005 case against Greenberg that finally went to trial two weeks ago after years of legal wrangling.

Justice Charles Ramos of New York state court in Manhattan, who is presiding over the non-jury trial, took over questioning Greenberg from Assistant Attorney General David Nachman in an effort to cut to the chase.

"There is no one in this room who doesn't think you're a brilliant business manager and a rational person," the judge said, noting there were no clear financial benefits to the company from the Capco transaction. "Why would AIG go through the Capco transaction in the first place? What was the motivation for that?"

Greenberg responded that the transaction was designed to help AIG managers by taking off their books so-called run-off - years of leftover claims from a shut-down auto warranty program. "They were arguing they shouldn't be held accountable for the runoff," he testified.

"They didn't want this negative?" Ramos asked.

"Right. That was the only reason," said Greenberg.   Continued...

Maurice "Hank" Greenberg, former chairman of American International Group Inc., (AIG) arrives at the New York State Supreme Courthouse in Manhattan, New York City, U.S., September 29, 2016.  REUTERS/Brendan McDermid