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Group Urging That Investigations Be Curtailed Is Funded by Former AIG CEO

A committee that has recommended an easing of corporate regulation and accounting standards and curtailing the activities of state attorneys general received $500,000 in funding...
December 5, 2006

A committee that has recommended an easing of corporate regulation and accounting standards and curtailing the activities of state attorneys general received $500,000 in funding from a foundation chaired by former American International Group Chairman Maurice Greenberg. The Committee on Capital Markets Regulation said in an interim report issued last week that a reduction in "regulation and litigation, while enhancing shareholder rights, will improve the competitiveness of U.S. capital markets."

AIG earlier this year agreed to pay a $1.6 billion settlement after New York Attorney General Eliot Spitzer brought a civil fraud action against the company over alleged accounting infractions. Greenberg, who was named in the suit, has not settled and is contesting allegations he was involved in false transfers of reserves and the creation of offshore entities to prop up AIG's results.

Among the recommendations in the report is that "criminal enforcement against companies should be a last resort, reserved for companies that have become criminal enterprises from top to bottom. We should not hold outside directors responsible for corporate malfeasance that they cannot possibly detect." A consumer group that blasted the report said other recommendations in it would give federal regulators precedence in enforcement matters, effectively curtailing activities by state attorneys general like New York's Eliot Spitzer.

"The power given to prosecutors and the personal responsibility of CEOs created under Sarbanes-Oxley were key contributors to Greenberg's ouster from AIG," said Carmen Balber, a spokesperson at the non-partisan Foundation for Taxpayer and Consumer Rights based in California. "This proposal is an attack by a discredited CEO against the corporate governance laws that ended his 37-year reign at the helm of AIG," she added. An anonymous source with knowledge of the Starr Foundation told the National Underwriter the grant to the committee was unfettered and there was "no requirement to fund this sort of report." The committee was formed with the support of U.S. Treasury Secretary Henry M. Paulson.
 
Group Urging Less Regulation Has Greenberg's Backing (National Underwriter 12/1/06)