Loading LiveCycle Banners.
  1. News Articles
  2. Related News Articles
News Article Details

Trial of Former Gen Re and AIG Execs Underway

Back | A- | A+
 Email This     Print     Subscribe

Posted on 08 Jan 2008

The trial of five former General Re Corp. and American Opening International Group Inc. (AIG) executives is underway, with opening arguments heard on Monday. The executives are charged with conspiring to inflate AIG’s loss reserves by $500 million with a pair of bogus reinsurance transactions.   
told Jurors in a federal courtroom in Hartford, Conn. were told by Assistant U.S. Attorney Raymond Patricco that former Gen Re Chief Executive Officer Ronald E. Ferguson and four others conspired in a deal that transferred no risk to AIG and that they knew that AIG would account for the deal improperly as a reinsurance transaction.   
“The evidence in this case will show that in reality the deal was a sham transaction designed to deceive AIG auditors, analysts and shareholders, and these five defendants knew it,” Mr. Patricco said.   
Also charged in the case are Christopher P. Garand, former senior vp in charge of U.S. finite underwriting for Gen Re; Robert D. Graham, former Gen Re senior vp and legal counsel; Elizabeth A. Monrad, former chief financial officer for the reinsurer; and Christian M. Milton, AIG’s former vp for reinsurance.   
Citing e-mails and tape-recorded conversations between certain defendants and John Houldsworth—former CEO of Gen Re’s Cologne Re Dublin unit—Mr. Patricco also charged that the defendants created a phony paper trail to mislead AIG’s auditors. While former AIG CEO Maurice R. Greenberg initiated the transaction in an October 2000 phone call to Mr. Ferguson, the paper trail made it appear that Gen Re had launched the deal, the prosecutor said. Mr. Greenberg, identified as an unindicted co-conspirator in court filings, has not been charged in the case.   
AIG also rebated a $10 million Gen Re premium payment and paid Gen Re a $5 million fee for the deal in separate transactions designed to conceal their connection to the reinsurance contracts, Mr. Patricco told jurors.   
Mr. Houldsworth and former Gen Re VP Richard Napier—who have both pleaded guilty to securities fraud charges in conjunction with the case—will be key government witnesses.   
Defense lawyers, meanwhile, attacked the government’s case, arguing the defendants believed the reinsurance deal to be legitimate and that they had no control over how AIG accounted for the transaction.   
The 2000 agreement was in fact a finite risk contract and not the “no risk” deal that prosecutors allege was struck in an undisclosed side agreement between Gen Re and AIG, several defense lawyers said.   
“There was no side deal between Ron Ferguson and Hank Greenberg to transfer no risk to AIG,” Michael Horowitz, a lawyer for Mr. Ferguson told jurors. Mr. Horowitz with Cadwalader, Wickersham & Taft in Washington.


Post a Comment
If you are a Storefront / Tradingfloor user, click here to login.
Note: As a guest user, please fill out the form below to post a comment.
Post your comments here.
Name :
Email Address :
Captcha :
Comments :
Character left : 2000