2003 Lawsuit Suggests AIG Wasn't Always So Careful To Honor Bonus Deals

Source: Talking Points Memo

2003 Lawsuit Suggests AIG Wasn't Always So Careful To Honor Bonus Deals
By Zachary Roth - March 17, 2009, 6:35PM

Since the AIG bonus brouhaha broke over the weekend, the hobbled insurance giant has essentially been claiming it had to make the payments because not doing so could have created a "defalt event," potentially exposing taxpayers to losses of hundreds of billions down the road.

That may or may not be a legitimate argument (most experts seem to be saying "not"). But it's worth noting that just a few short years ago, there was a case in which AIG wasn't quite so fastidious about honoring bonus agreements with its employees.

Earlier today, we highlighted some excerpts from a 2004 deposition given by Joseph Cassano, who was then the head of AIG's financial products unit -- the division whose massive losses on credit default swaps would later bring the company to its knees. But the story of the underlying case, as summarized at the time by a trade publication, is just as revealing as Cassano's testimony.

AIG was being sued for breach of contract by a former employee, Rob Feilbogen. Feilbogen claimed that when the unit he worked for, AIG Trading, was put under the control of Cassano's AIG Financial Products, he was informed in writing by an AIGFP executive that the company's previous guarantee to pay him a bonus of $1.3 million would no longer be operative. Feilbogen said he was told he would still be eligible for a bonus, but the $1.3 million figure would not be guaranteed.

Read more: http://tpmmuckraker.talkingpointsmemo.com/2009/03/2003_lawsuit_suggests_aig_wasnt_always_so_careful.php

NEW YORK (Reuters) - Connecticut's attorney general said he had "significant doubts" that $165 million of bonuses recently awarded by American International Group Inc are required under state law.

"AIG is shamelessly shielding itself behind the Connecticut Wage Act, a joke of a justification for squandering scarce taxpayer resources," Attorney General Richard Blumenthal said in a statement on Tuesday. "We should use any and every well-founded legal weapon to recapture these baseless bonuses."

Blumenthal said his office will "carefully investigate" the merits of AIG's claims, but added: "Corporate collapse demands accountability -- not windfall payments."

AIG awarded the bonuses even after getting a series of taxpayer bailouts totaling roughly $180 billion, and incurring a $61.7 billion fourth-quarter loss.

http://www.reuters.com/article/topNews/idUSTRE52G6N020090317

Don't pay them and let the would-be beneficiaries sue.

:-)

carelessly like they do now.