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Greenberg sues AIG over derivative litigation


WILMINGTON, Del.--Firing back at a $1 billion lawsuit filed against him last week by his former company, Maurice R. Greenberg on Wednesday sued various current and former American International Group Inc. directors and management as well as the insurer's longtime auditor, PricewaterhouseCoopers L.L.P.

New York-based AIG last week took control of a derivative suit by company shareholders, suing Mr. Greenberg--the former chairman and chief executive of the New York-based insurer--and former AIG chief financial officer Howard I. Smith for more than $1 billion in damages for alleged wrongdoing and resulting losses to the company (BI, June 18).

Mr. Greenberg's suit, filed in the form of a third-party complaint in Delaware Chancery Court, states that AIG's amended complaint in that pending derivative suit is without merit and that he intends to defend himself.

In his suit, the former AIG CEO denies allegations by the insurer that he was responsible for any damage to AIG's reputation and financial standing, and argues that any harm to the company and its shareholders was instead the result of decisions made by AIG's board and management--including the decision to restate company earnings and pay a $1.64 billion settlement with then-New York Attorney General Eliot Spitzer and other officials.

Messrs. Greenberg and Smith left AIG in March 2005. They are now top executives at C.V. Starr & Co., which for many years produced business for AIG.

Mr. Greenberg's suit names as defendants AIG President and CEO Martin J. Sullivan and Steven J. Bensinger, executive vp and CFO.

Additionally, it names several current AIG board members, including: Marshall A. Cohen, Martin S. Feldstein, Ellen V. Futter, Steven L. Hammerman, Richard C. Holbrooke, George L. Miles, Edmund S.W. Tse and Frank G. Zarb.

Others named are AIG executives Kristian P. Moor and Jay S. Wintrob; retired executive Thomas R. Tizzio; and former board members M. Bernard Aidinoff and Pei-Yuan Chia.Furthermore, it names AIG's auditor, New York-based PricewaterhouseCoopers L.L.P., and INS Regulatory Insurance Services Inc., a regulatory consulting group.

Mr. Greenberg seeks contributions from the third-party defendants for any damages he is held liable to pay as a result of the derivative suit, plus attorney's fees and other costs.

"In order to begin the process of holding AIG's current board and management accountable for their conduct, with his answer Mr. Greenberg is also filing claims against them," David Boies, an attorney for Mr. Greenberg with the firm of Boies, Schiller & Flexner L.L.P., said in a statement.

In a statement, AIG said: "AIG's complaint was the product of a thorough investigation by a committee of independent directors. Mr. Greenberg's claims are inconsistent with the judgment of that independent committee and are without merit."