Attorneys General's Probes Reveal AIG's Boundless Greed

The total amount of bonuses paid to employees of the embattled insurance giant AIG was $218 million, more than $50 million higher than has widely been reported in the media, Attorney General Richard Blumenthal said.  More than 400 AIG employees received bonuses — starting at $1,000 and ranging up to the $6.4 million reportedly paid to an executive who lives in a mansion in Fairfield, Connecticut.

"The payments he appears to be referring to were made months ago, have been widely reported on and were specifically disclosed to the Treasury," spokesman Mark Herr said, adding that the $165 million in "retention payments" to executives of the Financial Products unit were made in March.

"We've not only added the numbers, but the company has given us documents that have the number at $218 million," Blumenthal said. "Some of that total is from earlier bonuses, but the main point is all of it seems to be out of taxpayer funds. ... Whether the payments were made in December or March seems to be beside the point. The total that was disclosed so far was $165 million." Blumenthal added that his new numbers are correct. "There's certainly no double-counting," he said in an interview from his office Saturday

A.I.G. is effectively suing its majority owner, the U.S. government, which has an 80 percent stake in the insurer. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that A.I.G. is spending taxpayer money to pursue its case, something it is legally entitled to do. Its initial claim was denied by the Internal Revenue Service last year.

The lawsuit, filed Feb. 27, 2009, in U.S. District Court in Manhattan, details, among other things, certain tax-related dealings of the financial products unit, the once high-flying division that has been singled out for its role in A.I.G.’s financial crisis last autumn.

The Connecticut attorney general also sharply disputed AIG's view that it was legally obliged to pay the bonuses.

"AIG was categorically wrong when it claimed that state labor law compelled payments of these outrageous, unconscionable bonuses," Blumenthal said in a statement.  "A provision in Connecticut law requiring double payment for failure to pay wages does not apply to AIG bonuses," he said, calling it "a joke of a justification to reward financial failure and fiasco."

New Jersey Attorney General Anne Milgram said she sent a letter to AIG Chief Executive Officer Edward Liddy demanding a list of employees in the AIG Financial Products unit who received bonuses since September. Milgram said in a statement that she asked AIG to send her the information about bonus recipients and copies of their employment contracts within five days. She was joined in the request by Arizona, Delaware, Illinois, Kentucky, Louisiana, Maine, Michigan, Mississippi, Montana, Nebraska, New Mexico, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Washington and West Virginia.