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Hank Greenberg Launches Suit Against U.S. Over AIG Takeover

Source: Liam Pleven & Serena Ng

Posted on 21 Nov 2011

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Three years after the federal takeover of American International Group Inc., longtime former Chief Executive Maurice R. "Hank" Greenberg is launching a broad legal assault that paints the government's move as unconstitutional.

Starr International Co., a firm headed by Mr. Greenberg that was AIG's largest shareholder at the time of the 2008 government rescue, filed a lawsuit Monday in the U.S. Court of Federal Claims. The action accuses the U.S. government of using the giant insurer as a vehicle to ship cash to AIG's trading partners. The court has jurisdiction in cases involving claims against the federal government.

The suit alleges that by getting a nearly 80% stake in AIG in exchange for providing tens of billions of dollars in aid, the government took valuable property from Starr and other AIG shareholders in violation of the Fifth Amendment, which says that private property can't be taken for "public use, without just compensation."

A Treasury spokesman had no immediate comment. An AIG representative declined to comment.

Starr seeks damages for itself and other shareholders of at least $25 billion. AIG is listed as a "nominal defendant" in the suit, which also seeks damages for the company.