American International Group Inc. (AIG), its former chairman Maurice “Hank” Greenberg, its former CFO Howard Smith, C.V. Starr & Co. Inc. and Starr International Co. Inc. (SICO) have agreed to settle all disputes between AIG, on the one hand, and Greenberg, Smith, C.V. Starr and SICO, on the other.
In July a federal judge upheld a jury ruling that Greenberg did not wrongly transfer $4.3 billion in AIG stock to his closely held concern, New York-based Starr International Co., upon being ousted from AIG.
Separately, in August, Greenberg agreed to pay $15 million, and Smith agreed to pay $1.5 million to settle with the Securities and Exchange Commission, which charged that Greenberg was a "control person" under Section 20(a) of the Exchange Act.
Under the current agreement, parties will release each other from all claims, including any claims by Greenberg and Smith against AIG for indemnification of future legal fees and expenses or settlement costs. The parties have further agreed to submit to an independent third party Greenberg’s and Smith’s claims for past legal fees and expenses for a determination of which of those fees (up to a $150 million cap) AIG is legally obligated to pay under AIG’s charter and by-laws, and Delaware law.
“We are pleased that we have resolved our differences,” says Robert Benmosche, AIG CEO. “The resolution of these long-running disputes will remove a significant distraction and expense, and allow AIG to better focus its efforts on paying back taxpayers and restoring the value of our franchise for the benefit of all our stakeholders.”
“I, too, am pleased that these long-running disputes are now over, and I want to express my appreciation for Bob Benmosche’s help, and the help of the AIG Board, in resolving them,” says Greenberg. “I look forward to assisting AIG in trying to preserve and restore as much value as possible for all of AIG’s stakeholders.”
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