Spotting the Un-American Insurance Group


Sightings from The Catbird Seat

~ o ~

December 11, 2006

DP World Hooks Up With AIG

Parmy Olson, Forbes

Remember all the political hullabaloo made over Dubai Ports World earlier this year? (See: ” Dubai Divide.”)

A chorus of politicians had pointed frantically to what they said was a threat to America’s security when the Arab shipping company looked set to pick up several major U.S. port operations via its $6.8 billion acquisition of P&O.

Somewhat alarmed at the protests, DP World offered last March to “transfer” P&O’s American interests to an American company — and on Monday announced it had finally found a friend in AIG Global Investment Group.

News of the contract was applauded by investors, who sent shares in AIG up 0.9% or 65 cents to $71 in late afternoon Monday trading in New York.

The businesses, spanned six major seaports in New York/New Jersey, Philadelphia, Baltimore, Miami, Tampa and New Orleans, were reportedly worth around $700 million. But DP World said only that it had received a “fair” price, and added that it was “disappointed to be exiting the U.S. market.”

One person who won’t be disappointed is Democratic Senator Charles Schumer, one of the more vocal critics of the deal. Last February, he’d questioned if Dubai could be trusted to “operate our ports in this post 9/11 world.”

The mollified politician now says the AIG contract is “an appropriate final chapter to the book on the Dubai Ports World deal.”

The deal should close in the next few months and AIG, a New York-based insurance company, says it will be “one of the industry leaders in setting standards for port security.”

DP World is overseen by Sheikh Mohammed bin Rashid Al Maktoum, the Prime Minister of the United Arab Emirates and ruler of Dubai. While neither he nor DP World have had any apparent links to terrorism, critics of the deal had cited alleged financing by the UAE of the Sept. 11 terror attacks, and the government’s prior support of the Taliban regime.

For more, GO TO > > Aloha, Harken Energy; The Strange Saga of BCCI; The Carlyle Group; The Impeachment of George W. Bush; Investigating Investcorp; The Department of Homeland Security; The Secrets of Henry Paulson, Vampires in The Treasury Department; Who’s Guarding the Hen House?


December 1, 2006

Greenberg buying up
New York Times shares

By Jerry Mazza, Online Journal

“Hammering Hank,” as he’s better known to colleagues, is at it again. According to Reuters, AP, and CNBC at msn.Money, Maurice “Hank” Greenberg has been buying up shares of The New York Times Company to try to break the Sulzberger family’s “hold” on it.

Watch out!

As you may remember, Greenberg resigned as CEO from the board of AIG (American Insurance Group) in February 2005, and left the company on March 14, following “regulatory inquiries” made by Attorney General Spitzer (recently elected New York governor). Subsequently AIG and its new CEO Martin Sullivan paid a fine of over $1.6 billion.

Greenberg’s former satellite firm, Marsh & McLennan Companies (MMC), the world’s largest insurance broker, was run by Hank’s son Jeffrey Greenberg from 1993 to 2004. Jeffrey left 11 days after Spitzer’s civil action against MMC was presented on Oct 14, 2004. In January 2005, Marsh was forced to pay $850 million in fines to policyholders for steering clients to insurers from which it received lucrative payoffs.

Both Greenberg Sr. and Jeffrey Greenberg are Council on Foreign Relations members.

By the way, Marsh also bought Kroll, the security and military contracting company that recently pulled out of Iraq. Just a bit of back story about the Greenberg familia. There’s more linked in my September 29 article in Online Journal. And there’s more in my October 9 article, Answering the mail re: Greenberg & AIG. In it, there is a notable quote by Michael Ruppert (From The Wilderness):

FTW has also conducted an extensive investigation into AIG and its predecessors, including the C. V. Starr Insurance Companies, revealing deep connections to US intelligence dating back to the Office of Strategic Services (OSS) in World War II. These connections include documented CIA operatives connected to drug smuggling from Southeast Asia and a current board member, Frank Wisner, Jr., whose father was a key figure in the creation of the CIA. History, as well as AIG’s current operations suggest, that these relationships continue unabated today…

” . . . AIG has also been connected, albeit indirectly, to a major money laundering case. As the insurance carrier for the Bank of New York (BoNY) they are defending BoNY in a suit filed this year by BoNY shareholders charging mismanagement of the bank. That suit arose from revelations (See FTW Vol II, No.7, 9/99) in the major media that BoNY had been involved in laundering between $7 and $10 billion in criminal money out of Russia during the 1990s under its Chairman, Thomas Renyi.

A credible source has told me, but I have not been able to confirm it, that AIG also insures the U.S. Department of Justice which was charged with investigating BoNY and which decided not to file criminal charges in 1999.”

You have to ask yourself, with a background and resume like this, is this man qualified to own and run a major newspaper? And, if given his druthers, is he also fit to make a bid for the Tribune Company, which owns, among others, the Chicago Tribune, the Los Angeles Times, Newsday and a host of TV stations? He has sold more than $1.5 billion in AIG shares since May, the articles report, it would seem he has some cash in hand for buying.

Do we need another Rupert Murdoch, eager to envelope and steer more media to the right? Do we need Maurice Greenberg, a man who grew out of a corporate culture with long-standing affiliation to the OSS and CIA, an insurance company reputedly involved in money-laundering and drug-smuggling while operating conveniently in some 135 countries?

What’s more, Greenberg has had some help in his Times Company plans from Morgan Stanley, which “submitted a proposal to the [Times] Company that is aimed at cutting the Sulzberger family’s long-standing control of the company by changing the voting structure so that shareholders have equal voting rights.”

It would seem that such an act would compromise the Time’s company’s editorial content, given a block of voters or single large share-block voter, who might chose to interfere in policy.

Additionally, AIG, Greenberg, and Morgan Stanley share another tie mentioned in my article The PROMIS of 9/11 and beyond. I think the opening paragraph underscores a darker side of AIG and Morgan Stanley’s business. The italics are mine…

As whistleblower Richard Grove points out, SilverStream (the software company he worked for at the time of 9/11), served not only AIG (American Insurance Group), it also built trading applications for Merrill Lynch, Deutsche Bank, Banker’s Trust, Alex Brown, Morgan Stanley, and Marsh McLennan. With this impressive list, according to Grove, “you pretty much had the major players involved in the financial aspect of the 9/11 fraudulent trading activity.

Thus, every fiber in me smells a rat in this alliance.

Let me add, too, I am a New York Times reader, online and off. I don’t think it’s a perfect newspaper. I prefer alternative media. But I respect its right to be, and not to be interfered with by the likes of Maurice Greenberg or Morgan Stanley or any of the brokerage firms above listed. The news, and whatever truth The Times brings, should not be for sale to these power brokers.

Thank you, I’ll take the Sulzbergers.

See also: Parrots in the Newsroom


Example fraud:

Tri-Lateral Investment Group

Excerpt from Al Martin’s book about
Bush’s Harken Energy Fraud

From Demopedia

… The Tri-Lateral Investment Group, Ltd. is also one of the deals (one of the very few deals, perhaps only a few dozen deals in that era by this group of guys) that you could connect Jeb, Neil, George, Jr., Prescott, and Wally Bush.

All five you can put in the Tri-Lateral Investment Group, Ltd. You can put Neil in it vis-a-vis Tri-Lateral’s dealings with Neil’s Gulf Stream Realty.

Then you back up a step and put Neil Bush into Tri-Lateral Investment Group’s dealings with the Winn Financial Group of Denver run by the infamous former Ambassador to Switzerland, Phillip Winn.

You can put George, Jr. in the deal vis-a-vis the Tri-Lateral Group Ltd.’s fraudulent relationship with American International Group (AIG), of which George, Jr. was a part through the same series of fraudulent fidelity guarantee instruments issued on behalf of Harken Energy from American International Group.

Tri-Lateral Investment Group then sold bogus oil and gas leases to AIG.

This is a direct fraud that George, Jr. profited to the extent of (not a lot) $1.6 or $1.7 million.

But it was a clear out-and-out fraud.

External links:






~ ~ ~



December 11, 2006

2 Sanctioned by SEC
Over PNC Accounting

Associated Press, Forbes

An accounting executive at PNC Financial Services Group Inc. and an outside auditor were sanctioned by federal regulators Monday for their alleged roles in the regional bank’s faulty accounting in 2001, said to have inflated earnings by concealing $762 million in potential liabilities.

The Securities and Exchange Commission announced the settlements with Thomas Garbe, who was PNC’s director of accounting policy at the time, and Michael Joseph, a former partner with the major accounting firm Ernst & Young, which reviewed the transaction at issue. Garbe and Joseph neither admitted nor denied the SEC’s allegations but agreed to refrain from future violations of the securities laws….

The agency had previously alleged that Pittsburgh-based PNC tried to conceal $762 million in sour corporate loans in 2001 by selling them to three partnerships it created expressly for that purpose with insurance giant American International Group Inc.

For a fee, AIG offered to establish special-purpose entities to which PNC could transfer the troubled assets, but there was no actual transfer of risk from the bank to the insurer, according to the SEC.

In a July 2002 settlement of the issue, PNC was not fined but agreed to give the SEC and the Federal Reserve Bank of Cleveland greater access to company records. New York-based AIG signed agreements with the SEC and the Justice Department in late 2004 in which it agreed to pay $126 million to settle allegations of aiding flawed accounting by PNC and Brightpoint Inc.

More recently, AIG agreed last February to pay a record $1.64 billion in a settlement with the SEC and New York state authorities, and apologized for having deceived investors and regulators with misleading accounting practices. AIG was alleged to have taken part in bid-rigging schemes, paid secret commissions to insurance brokers to steer business to it, used phony insurance deals to burnish its earnings and misstated the amounts of workers’ compensation premiums it had collected.


November 17, 2006

2 AIG Units Get Subpoenas

Associated Press

Two units of the insurance company American International Group Inc. have received subpoenas from the Securities and Exchange Commission and the U.S. Justice Department, an AIG spokesman said Friday.

AIG Financial Products received a subpoena from the Justice Department’s anti-trust division and a separate unit, SunAmerica, received a subpoena from the SEC, said AIG spokesman Chris Weinans.

In recent days, several companies have received subpoenas related to an investigation of municipal guaranteed investment contracts, or GICs, by regulators.

Municipal GICs are fixed-rate, fixed-maturity contracts that municipalities can buy, like bonds, but they are backed by an insurance company.

The AIG spokesman couldn’t give details about the subpoenas, nor could he confirm whether they are related to the GICs investigation, but he said that SunAmerica is involved in issuing GICs.

An XL Capital Ltd. (nyse: XLnews people ) subsidiary is also among the companies that received subpoenas, XL said Thursday in a filing with the SEC.

Shares of AIG slipped 31 cents to close at $72.05 Friday on the New York Stock Exchange. The insurance company is based in New York.


February 9, 2006

Most States to Share
in AIG Settlement

By Michael Gormley (AP), Forbes

Most states will get varying shares of $344 million in back taxes as part of a$1.64 billion settlement reached Thursday between regulators and American International Group Inc., one of the world’s largest insurers.

For example, Rhode Island is in line for a $97 million check from AIG whileFlorida is eligible for $52 million and Louisiana and Massachusetts could each get$33 million.

Thirty-five states will share in $42 million in tax reimbursements on worker compensation premiums that New York Attorney General Eliot Spitzer said AIG didn’t pay from 1986 to 1995.

In addition, 45 states will share in more than $301 million in assessments, another fee charged by states, that weren’t properly paid by AIG during that time. The bulk of the cash is in interest, said David Brown, chief of Spitzer’s investment protection bureau.

AIG and its past management had been accused of deceptive accounting practices to mislead investors and regulators. States may either sign a waiver from further action against AIG to collect the payments or pursue separate settlements, Brown said.

AIG said that under the settlement it will pay $800 million for investors who were deceived by AIG’s accounting tactics, including a $100 million penalty to the SEC. The SEC will track down those investors harmed by false data that boosted AIG stock.

Another $375 million will go to policyholders harmed by alleged bid-rigging.

New York state will get $100 million for its general fund in penalties and the U.S. Justice Department will get $25 million.

The $344 million to the states comes courtesy of whistleblower Michael Joye.

As AIG’s general counsel in 1992, Joye was at the top of his career when he accused AIG’s past management of disguising worker compensation premiums and assessments to avoid paying higher state taxes, Brown said Thursday. After what Brown called “a huge internal dustup,” the previous management didn’t change its ways. So Joye quit one of the largest corporations in America to open a practice in Princeton, N.J.

A year ago, when news of Spitzer’s AIG investigation broke, Joye called the attorney general and told his story.

The state Insurance Department and Spitzer’s investigators then painstakingly recreated the tax liability since 1992 and came up with compensation that the new AIG management agreed to pay.

“The guy is a hero, really,” Brown said. “This is exactly what you hope people would do.”

Joye didn’t respond to a request for comment.

~ o ~

 – A tip of the Catbird’s wing to Michael Joye! Well done, Michael!

~ o ~

(For more, GO TO > > > Tom Kirkondall’s: “AIG is sounding more like Enron all the time,” at


February 2, 2006

4 Charged With Fraud in
Insurance Inquiry

By Timothy L. O’Brien, New York Times

Three former executives of the General Reinsurance Corporation and a former executive of American International Group have been indicted on charges that they fraudulently manipulated A.I.G.’s finances in order to mislead analysts and investors, the Justice Department said today.

A federal grand jury in Norfolk, Va., charged the four former executives with 13 counts of conspiracy, fraud and false statements.

The individuals named in the complaints, are Ronald E. Ferguson, General Re’s former chief executive; Elizabeth A. Monrad, the former chief financial officer; and Robert Graham, the former general counsel. Christian M. Milton, the former head of A.I.G.’s reinsurance operations, was also charged.

Since early last year, federal prosecutors have been investigating General Re andA.I.G. for financial improprieties relating to transactions that artificially inflated A.I.G.’s reserves by $500 million in 2000 and 2001. Those are the transactions that are at the center of investigations by the Justice Department and theSecurities and Exchange Commission.

“Each of the defendants was aware that the true purpose of the transactions was to permit A.I.G. to report and record loss reserves it did not really have to calm analyst criticism of A.I.G.’s reduction in loss reserves in the third quarter of 2000,” the Justice Department said in a statement accompanying the indictment.

The New York attorney general, Eliot Spitzer, is also investigating improprieties at A.I.G. and has filed a civil fraud complaint against A.I.G. and its former chief executive, Maurice R. Greenberg, as well as the former chief financial officer,Howard I. Smith.

Federal prosecutors in Manhattan are also investigating whether Mr. Greenberg may have tried to manipulate A.I.G.’s share price shortly before he stepped down from the company’s helm. Mr. Greenberg has denied any wrongdoing; A.I.G. has been expected to seek a settlement with federal and state regulators.

“I’ve heard nothing from the government,” said Frederick P. Hafetz, a lawyer representing Mr. Milton, before the indictments were announced. “If indicted, Mr. Milton will vigorously contest the charges, and I’m confident he will be vindicated at trial.”…

The complaints raise questions about the potential impact on Warren E. Buffett, the billionaire investor who controls Berkshire Hathaway, which owns General Re, as well as on Mr. Greenberg. Mr. Buffett has not been charged with any wrongdoing in the investigation, and prosecutors have described him as nothing more than a cooperating witness….

The stocks of both companies dropped moderately today on the New York Stock Exchange, A.I.G. losing 80 cents, to close at $65.47, and Berkshire Hathaway losing $190, to $88,800.

In September, the Securities and Exchange Commission notified Joseph P. Brandon, General Re’s current chief executive, that it planned to file a civil fraud complaint against him in connection with its wide-ranging investigation of insurance industry abuses….

The S.E.C. also filed civil charges today, but it did not cite Mr. Brandon. Instead it named the four former insurance executives facing the criminal charges plusChristopher Garand, the former head of General Re’s finite reinsurance operation.

The five were charged with securities fraud in connection with what the agency called a “sham transaction.” They could face financial penalties, if convicted, and could be barred from becoming an executive or director of a public company.

A.I.G. has previously acknowledged that its transactions with General Re were improper. Regulators and prosecutors have characterized the deals as an effort by A.I.G. to make its financial statements appear more robust than they actually were. A.I.G. forced Mr. Greenberg, a strong-willed and detail-oriented executive, to retire last March because of improprieties associated with the transactions.

Mr. Ferguson served as General Re’s chief executive from 1987 to 2001, when Mr. Brandon succeeded him. Last spring, General Re terminated a consulting contract it had with Mr. Ferguson….

According to an e-mail message Mr. Ferguson wrote on Nov. 6, 2000, he said that he asked Mr. Buffett whether the A.I.G. transaction “passed the NYT test,” in a reference to The New York Times. According to a person who has read the message and described it over the telephone to a reporter, it stated that Mr. Buffett told Mr. Ferguson that the deal passed that test, “but not by a huge margin.”…

Last June, two former senior General Re executives, Richard Napier and John Houldsworth, pleaded guilty to fraud charges filed by the United States attorney’s office in Alexandria, Va. Both men acknowledged helping A.I.G. manipulate its accounts…

U.S. Department of Justice Press Release


January 30, 2006

Restraining Order Granted in AIG Dispute

Forbes, AP

A state judge granted a temporary restraining order Monday preventing private insurance agencies run by American International Group Inc.‘s, former CEO,Maurice “Hank” Greenberg, from trying to pry business from his old company.

The order lasts until Thursday, when both sides return to court for more arguments.

AIG, accusing the private insurance agencies of misconduct for trying to lure business from AIG, sued them last week. The agencies are subsidiaries of C.V. Starr & Co. Inc.

Greenberg controlled AIG for decades before being forced out in March 2005 during a probe of the insurer’s accounting practices. He is now battling AIG over who controls Starr.

In last week’s lawsuit, AIG tried to block a Starr division from selling insurance policies for other companies, including the National Indemnity Co., a division ofBerkshire Hathaway Inc. On Friday, Starr filed a lawsuit accusing AIG of trying to prevent Starr’s agencies from competing with AIG….

New York Attorney General Eliot Spitzer filed civil charges against Greenberg and AIG in May 2005, accusing them of improper accounting and misleading investors.

AIG, which has restated five years of earnings, is expected to pay more than$1 billion to settle civil fraud charges.

Greenberg denies wrongdoing.


December 14, 2005


Insurance Exec Shorted Foundation


New York Attorney General Eliot Spitzer on Wednesday accused embattled insurance executive Maurice R. “Hank” Greenberg of participating in a series of financial transactions 35 years ago that cost the charitable foundation of his mentor $6 billion.

Spitzer’s allegations were contained in a letter delivered Wednesday to the president of the Starr Foundation. They represent the latest escalation of his battle with Greenberg, who resigned in March as the chairman and chief executive of American International Group Inc. amid widening federal and state probes of accounting irregularities at the world’s largest property and casualty insurance company.

The Starr Foundation’s 2003 tax return filed with the Internal Revenue Service listed assets of $3.6 billion, made up mostly of shares in AIG, and showed that it made more than $188 million in charitable donations that year. The bulk of those were grants to colleges and tuition payments made for students.

The attorney general urged the foundation to take civil action against Greenberg and suggested he would do so if they don’t act by the end of January to recover the assets and reconstitute its board “to guarantee it the independence needed to advance its charitable mission into the future.”

Spitzer alleged in the letter that records obtained by court order from AIG’s Bermuda offices show that three transactions in 1969 and 1970 were rife with conflicts of interest that harmed the interests of the charitable foundation.

“Mr. Greenberg directed a series of transactions that deprived the Starr Foundation of billions of dollars in assets,” said Spitzer spokesman Darren Dopp. “Whether that improper conduct occurred yesterday or years ago doesn’t matter. There is no sunset on fiduciary obligations.”…

For more, GO TO > > > The Starr Foundation


September 4, 2005

Cash payoffs, bonds and murder
linked to White House 911 finance

Documents point to attack on America
by White House crime families

by Tom Flocco,

Sioux City, Iowa – According to leaked documents from an intelligence file obtained through a military source in the Office of Naval Intelligence (ONI), on or about September 12, 1991 non-performing and unauthorized gold-backed debt instruments were used to purchase ten-year “Brady” bonds.

The bonds in turn were illegally employed as collateral to borrow $240 billion–120 in Japanese Yen and 120 in Deutsch Marks–exchanged for U.S. currency under false pretenses; or counterfeit and unlawful conversion of collateral against which an unlimited amount of money could be created in derivatives and debt instruments.

The illegal transactions are also linked to the murder of a U.S. Army colonel charged with overseeing approximately 175 secret CIA bank accounts, according to the officer’s wife, Mrs. V. K. Durham. During multiple interviews, Durham that Bush 41 and Clinton administration officials visited her husband Colonel Russell Hermann several times in the months prior to and three days before his torture and murder on August 29, 1994.

Durham told us the $240 billion in stolen currency was obtained resulting from George H. W. Bush’s presidential abuse of power, when he authorized former Treasury Secretary Nicholas Brady and former Secretary of State James Baker III to make fraudulent use of the Durham Family Trust collateral without her permission. There is evidence that Colonel Hermanns and V. K. Durhams signatures were forged on a Goldman-Sachs bank account certificationrequesting the conversions to U.S. currency.

The money was never repaid since the ten-year Brady bonds–purchased before September 13, 1991 using the fraudulent collateral and gold bullion as security came due on September 12, 2001-the day after the 9.11 attacks, having allegedly been underwritten and held by the trustee, Cantor-Fitzgerald bond brokerage firm [whose offices on floors 101-105 in the North Tower of the World Trade Center (WTC) were destroyed on 9.11 along with the Brady bond evidence].

Three days before his suspicious death, Colonel Hermann told his wife that former President George H. W. Bush, Federal Reserve Chairman Alan Greenspanand U.S. Marine Colonel Oliver North (pardoned by Bush Sr. two years earlier for his Iran contra indictments when Bush Sr. was also facing indictments for his role in Iran contra) all passed V. K. Durham coming up in an adjacent elevator after all three had left Hermann’s room and gone down in another elevator at the Veterans Administration Health Care Center in Marion, Illinois.

Hermann had been probing Bush 41 and Clinton links to narcotics money laundering, according to his wife.

Durham told us that Colonel Hermann told her Bush, Greenspan and North were trying to get me to sign off on the CI Ltd., the Central Intelligence, Ltd.,Iran and Latin American contra accounts. They held about $13-17 billion in physical gold.”

This, raising questions about an evidence trail for a grand jury to seek restoration of funds potentially stolen by high government officials from United States taxpayers….

Misused collateral = gold security = bogus bonds =
$240 billion stolen currency

Evidence indicates that on August 19, 1991, John D’ Aquisto of DFG Inc. mailed (1A) Federal Express packages to United States Federal Reserve Bank Chairman Alan Greenspan and Bush 41 Secretary of the Treasury Nicholas Brady to communicate details of currency exchange transactions which ultimately led to multiple allegations of bank fraud involving billions of dollars, according to V. K. Durham. It is not known whether this cash was laundered into the Philippines and then used for the “family,” referred to in the Wanta-Cheney memo.

The FedEx receipts show contact between Greenspan, Brady and John D’ Aquisto and given the bank fraud links, Greenspan’s visit to Russell Hermann and the close proximity of the transactions to September 11, Durham says prosecutors should interrogate the three about their knowledge of improper banking activities which could be linked to the North Tower attacks at Cantor-Fitzgerald and the Pentagon impact reportedly involving the ONI on September 11–witnesses for a grand jury, should an official entity decide to prosecute mass murder on behalf of U.S. taxpayers….

According to Stewart Webb, Nevada Secretary of State Frankie Sue Del Papa, a Bush shadow government player, participated as a co-conspirator to obstruct justice, intentionally switching forged documents pertaining to registrations and filings of corporations involving Bush 41 and Leonard Millman. One of the corporations connected to the gold-backed Brady bonds above was Cosmos Corporation of Nevada–one of several Cosmos corporations.

Robert D. Hammond, Vice President of the Securities Sales Department, Goldman Sachs & Co., wrote to John D’ Aquisto and DFG, Inc. on August 7, 1991, certifying that DFG had an account with Goldman, number 027-02082-2; however, the letter’s notary seal contained the forged signatures of both V. K. Durham and her husband, Colonel Russell Hermann. [ Durham initialed and attested to the alleged bank fraud directly on the notarized document, indicating the signatures Goldman sent to DAquisto were forgeries ]:

“Please be advised that if DFG wishes to engage in foreign currency transactions,Goldman Sachs has extensive capabilities in this area. For instance, upon receipt of approximately 700 million Japanese yen into the above account, Goldman could convert such funds into approximately $5 million U.S. dollars.”

D’ Aquisto also complained about more alleged bank fraud by Goldman Sachs in a letter to Phil Roberts in the Bank Fraud Division at the U. S. Department of the Treasury, written on September 10, 1991, regarding suspect banking procedures wherein “funds were reversed and withdrawn from our account without our permission.”

In another letter on September 10, 1991 to Karl Ehm, D’ Aquisto and Russell Hermann asked “did you receive the return of $5,117,280.00 back from Goldman-Sachs?” The letter also indicated “no zero balance shown after the activity summary,” providing no evidence that $5+ million was withdrawn just minutes after it was deposited while showing that the money was still in the account.

The letter specifically referred to a partial Japanese Yen transfer which took place at Goldman’s Los Angeles office prior to the September 13, 1991 ten-year contract. The transaction in California provides potential U.S. jurisdiction and venue for another citizen grand jury should obstruction of justice continue in New York City where Spitzer and Morgenthau refuse to probe the suspect $240 billion dollar financial transaction which came due at Cantor-Fitzgerald two days after the 9.11 attacks:

“On September 10, 1991 we received our August 1st-August 31 statement from Goldman…On the statement enclosed you will see that the Japanese Yen went to Mitsui Bank of Tokyo, which is Goldman Sachs’ correspondent bank. The monies were then credited to the account and exchanged and deposited, U.S.D. equivalent at the rate of exchange. That part of the transaction was perfectly normal.”

“What happened next is what concerns me. On August 7, 1991, the funds were reversed and withdrawn from our account without our permission! There is no reference to the whereabouts, or disclosure of the whereabouts of this money, or of the receipt of acknowledgement that this transaction even took place.”

“As an ex-banker of 16 years, I feel that my rights have been violated to the highest degree, and the laws of the United States have been broken. I think you would call this bank fraud? According to Goldman Sachs, this was probably a clerical error on their part. I find it hard to believe that a company such as Goldman Sachs would be so negligent as to make a $5,117,280.00 “clerical error….you can call me at our other company Ariel Life Systems Inc., a government contracted corporation with the National Aeronautics and Space Administration (NASA).”

According to two witnesses, Greenberg-Traurig is allegedly tied to suspect legal entanglements surrounding the challenge for control of New Hampshire 9.11 widow Ellen Mariani’s estate and her husband Neil’s death on September 11. Mariani’s litigation in New York and New Hampshire against President Bush and other top officials seeking court-ordered discovery about White House involvement in the attacks and obstruction of justice by members of Congress was blocked due to complications surrounding the challenge for control of her husband’s estate.

Norman Brownstein was a former Director and the current corporate attorney for the late Leonard Millman’s MDC Holdings, Inc., the parent company of Silverado Savings and Loan Association where President George W. Bush’s brother Neil was a Director of the failed institution which cost American taxpayers at least $50 billion dollars.

Webb revealed he has evidence that proves Silverado laundered $12 trillion dollars in narcotics money during the time period that President Bush’s brother Neil was on the board of directors of the failed bank organization.

According to Leonard Millman’s ex-son-in-law Stewart Webb, $2.6 billion in Mena, Arkansas/Iran contra drug money was laundered through the Rose Law firm [where New York Senator Hillary Clinton was a partner] into Millman’s failed M&L Business Machines Company of Denver.

Webb alleged that his documented evidence and first-hand witnesses prove that Hank Greenberg, Leonard Millman and Meyer Blinder were all involved in massive securities fraud involving National Brokerage Group of Companies, and its Stinger Securities, Coral Gables Securities and others that allegedly milked American investors for billions of dollars during the 1980s. This, while Webb also alleged that Hank Greenberg was involved in re-insurance fraud loans with Millman’s National Acceptance Company which owned First National Acceptance Company, both of which own Bank of America, with the first two being financially connected to AIG.

Attorney General Spitzer is in possession of part of the above evidence relating to Leonard Millman’s links to $6 trillion in American pension fund fraud; moreover, Webb told us that former Independent Counsel Kenneth Starr–who the whistleblower said obstructed justice in his investigation of Clinton/Bush-linked narcotics money laundering–had lunch with Mr. Spitzer a few weeks ago, raising additional questions regarding obstruction of justice for a grand jury with subpoena power.

Webb alleges that drug money was laundered by Millman into Hank Greenberg’s AIG and other Wall Street accounts by Gwendolyn Waymark of the Waymark Group and also the Foundations Group–which the Cheney memo above links to boxes of cash moved from the Philippines and tied to both the recently deceased Millman and George H. W. Bush.

The Foundations Group’s laundered drug money paid for a group of 9.11 terrorists secretly headed by the Defense Intelligence Agency’s (DIA) Gary Best–one of the former Iran contra shadow government players–according to Webb.

Most shockingly, Webb alleges that “ONI-CIA Marine officer Oliver North,CIA-DIA agent Gary Best, CIA agent Terry Lynn Nichols and CIA contract agent Timothy McVeigh were all paid through Waymark’s Foundations Group funding arm–directly or indirectly.”

This raises the bar as to why the Vice President has not been subpoenaed when the Wanta memo directly links Cheney, Dr. Rice (and by authority and the obligation to act upon a financial terrorist threat– President Bush) to knowledge of the Foundations Group in what appears to be United States covert black operations involving financial terrorism and mass murder.

Webb told us, “this explosive evidence is why Eliot Spitzer and Robert Morgenthau are obstructing justice to let AIG off the 9.11 hook in the “public” part of their current and high-profile Wall Street probe. But it’s also why the Joint Congressional Intelligence Committee members are obstructing justice and committing treason by refusing to subpoena Cheney and other key intelligence officials regarding their awareness of a “family” extending from the Philippines to Europe and the United States–all with links to financing terrorism.”

A comprehensive grand jury investigation, with subpoenas, testimony and interrogation by independent, a-political career prosecutors like Patrick Fitzgerald could well blow the lid off 30+ years of illegal operations, financial terrorism, 9.11 mass murder, the Oklahoma City bombing, the Kennedy assassination and pre-emptive war based upon lies–a lengthy pattern of illegal activities by a succession of White House crime families, according to both Webb and V. K. Durham.

All this, tacitly endorsed by quietly complicit congressmen–either too frightened to speak truth to power due to past small-plane assassinations or having been self-absorbed by pensions, perks and power to exercise their constitutional mandate to protect the very citizenry which honors them with high office.

CIA banker’s strange death

Colonel Russell Hermann–a 53-year career military officer, had been conducting a two-year internal investigation of President Clinton, White House counsel Vincent Foster and protracted drug shipments into Mena, Arkansas; but Central Intelligence would not let him retire since it was too expensive to train new personnel and re-start the investigative trail, according to his wife “V.K.” who witnessed the first attempt on her husband’s life from her front porch in 1993.

Durham told us “he traveled in a big black truck with tons of surveillance equipment. I saw it, but he didn’t want me to come near it. He said ‘you don’t want to know about this;‘ and as he put his arms around me and kissed the back of my neck, he said ’we caught President [Clinton’s] man [Vince Foster] with Swiss bank accounts, so now I can file my investigation reports, retire, and we can start living a new life.’ “

“This was July 1, 1993. Vince Foster turned up dead on July 20 and my husband Russell was murdered on August 29, 1994,” she said.

“The next day, while mowing his lawn on July 2, 1993, Russell was sprayed with some type of poison gas–possibly sarin–from a passing vehicle. He took a few steps and went down, bleeding from the eyes, ears and nose,” said Durham who had married Hermann six years earlier on November 27, 1987.

“Russell had not finished his report on Clinton, Foster and the Mena, Arkansas drug money laundering, she said, adding that her husband had cryptically told her, “If I go to the hospital without that report being finished, I am a dead man.” This, reminiscent of Michael Corleone’s “men are coming to kill my father” plea to a lone nurse caring for the Godfather in an empty wing of a New York City hospital.

“There was no sign of an ambulance,” said Durham, “a 24 foot white box van with no lettering or markings took Colonel Herman away and he was missing and unaccounted for from 9:00 am till 10:00 pm at night. I found him the next day through a phone call at my neighbors.”

“He was at St. Mary’s Hospital in Clayton, Missouri–in a wing all by himself, strapped down to a bed with no life support system when I got to him, nothing,” she said, adding “Russell was a U.S. intelligence officer–a full Colonel–and he told me to ‘call my CWO2 [Chief Warrant Officer] and tell him to get my mandatory two men in here to protect my life.”

Offering a warning to current CIA officers, Durham said “Russell told me they strung him up on meat hooks on the way to the hospital–I saw the [warning: graphic photos] hook marks under his collar bone: they beat him and burnt him with cigarettes, broke his ribs, left hand and left arm, and shoved a cattle prod into his rectum,” said the furious widow, making a clear point: “they’ll do it again to any of the intelligence guys walking around now if they don’t do something to stop these criminals.”

St. Mary’s hospital was described to us as some sort of secret military asylum–a hospital of horrors, by Durham, who said “the hospital was filled with naval officers and a woman named Ruth said ‘you have to sign these papers (4-inch stack),’ and I asked ‘where are my husband’s records;’ she pulled them back and shredded them right in front of me–all his military records–a full-bird U.S. Army Colonel.”

“When Ruth had her back to me, another woman slipped me a piece of paper of the hours and medical log sheets with the hour Russell was taken to the hospital–helping to fix the hours of his torture and the fact that his ambulance authorization had not even been signed,” she said, “proving he was tortured in the back of that white truck–and this is the United Stated Veterans Administration!”

“Russell was kept there against his will after he recovered until November 17, 1993. One of the doctors, another friend of Russell’s and I saw Marine Colonel Oliver North dressed in a white medical coat attempting to disguise himself while visiting Russell’s hospital room on November 13 or 15, just before he was released from the hospital.

Durham told us, “something was going on at that hospital. I saw a Navy Commander strapped to a gurney–from Seal Beach…tied down. A female doctor was sitting there with his wife and they were bartering over his body parts. I heard all this with Russell’s doctor friend. The Commander was alive and strapped there, his eyes looked terrified and his mouth was taped shut,” she said, offering “his wife walked over to her husband and said ‘Now I’ll never have to know when you’re coming home again.’ We inquired about him later and found that he had come up ‘missing.’ “

Still weak and declining from the first murder attempt on his front lawn, Colonel Russell Hermann ended up at the Veterans Administration Health Care Center in Marion, Illinois; and Durham told us “Hillary Clinton’s operatives, David Horowitz and Karen Koffee came to meet with Russell, seeking money to underwrite the National Healthcare Program she was pushing in 1994.”

“This was on July 20. Russell told me Clinton’s people said ‘you’re going to die before very long and your wife will disappear and no one will know where she is,’ and both of them are accessories to murder as far as I am concerned,” said Durham, as we listened in stunned silence.

“Russell was doing pretty well around August, 1994, and on Friday, August 26, he said that George Bush Sr., Alan Greenspan and Oliver North came to see him in his hospital room at the VA, and tried to get him to sign off on the Iran and Latin America contra accounts so they could get control of them,” Durham told us, adding, “but Russell told me he just reached down and grabbed a hand-full of excrement from his hospital bowel and threw it at President Bush, saying ‘go to hell.’ Then the three of them left the room as I was coming up the other elevator.”

“I was planning to take Russell home from the VA the following Monday, August 29–a couple days after Bush, Greenspan and North visited on Friday. I came in to pick him up and he was dead,” she said, adding “the attending physician, Dr. Pettit ,refused to do an autopsy, even though Russell’s body was all red and he was given 8 or 9 injections on his hip and the base of his skull, and his back and body were as red as fire–but his eyes were as clear as mine.”

“The coroner, Michael Vickery, took a number of photographs and told me ‘this man was murdered,’ and I had been refused possession of his body for six days–from August 29 until September 5–after being told there was evidence that he was frozen alive, she told us while still in stunned silence.

When we asked what happen next, Durham said “I found out the contra accounts were moved from Republic Bank in Texas to Republic Bank in New York; I think Teddy Lloyd was the banker in New York. I believe they knocked Russell out and I thought he was dead. Then they moved him to the Guernsey Islands near England and used his voice-activated and fingerprint codes to sign over control of the $13-17 billion in gold that was in the accounts,” providing another paper trail for recovery of missing funds from the U.S. Treasury–but also a public view into the inner-working of intelligence bank account security.

V. K. Durham told us one of Russell’s men contacted her and said there had been a government contract to take out the Colonel by either a Commander McDonough or MacDonald, and that there are transcripts from the tape of his torture and death, but she does not know where they are….

Norman Philip Brownstein, a current Director of Denver’s Chubb Insurance Company, allegedly owned by George H. W. Bush and Webb’s ex father-in-law, the late Leonard Millman – through illegal trusts funded by laundered drug money controlled by Brownsteinpaid President Clinton’s legal fees and also paid off Paula Jones in her sexual harassment suit against the President. Clinton’s personal attorney, James M. Lyons–engulfed in the Whitewater scandal–sits on the board of Millman’s MDC holdings.

All this, according to Webb’s documents and first-hand witnesses, but also Webb’s grand jury demand–filed three times.

Webb told us as recently as August, 2004 in U.S. Federal Court in Denver [Case No. 95-Y-107], Chief Judge Richard Matsch has continued to ignore and obstruct his explosive evidence in a manner similar to when Matsch ruled in the Oklahoma City bombing case.

Lastly, another illegal operation employed to “control” and pay off House and Senate members was through Apartment Investment and Management Company(AIMCO)–a real estate investment trust (REIT) currently run by former Congressman Terry Considine and Bush 41 attorney Norman Brownstein.

Members of Congress have been bribed via the Department of Housing and Urban Development (HUD) via Millman and Brownstein’s handing over hidden corporate ownerships in AIMCO’s stolen HUD properties, the federal whistleblower has alleged.

According to Webb, AIMCO is the largest landlord of U.S. apartments–with units that were stolen by Millman’s partner Phil Winn of Denver’s Winn Group, the focus of the 1989 congressional “HUD Scandal ” investigation which led to Independent Prosecutor Arlen Adams convicting Switzerland Ambassador Phil Winn and others–but three months before leaving office, President Clinton pardoned Winn. And congressmen continue to profit from money stolen from the taxpayers.

All this, as the voices of thousands of American boys cry out from their graves on the bluffs above the Normandy beaches on the English Channel: “France!…now it’s your turn to help America.”

Who will guard the guards?

Mary Schneider contributed additional research for this report.

[Mary was illegally fired by the Department of Homeland Security for her whistleblower activity in the Orlando, FL Immigration office to protect America. Rep. Ric Keller (R-8-FL) and Sen. Bill Nelson (R-FL) refused to help Mary even after I flew to Florida and met personally with them….]


May 27, 2005

AIG Accountant PWC Alleged
to Have Disregarded Warnings

The long-time accounting firm for American International Group, PricewaterhouseCoopers LLP, reportedly ignored warnings from the audit committee for the AIG board of directors when that panel said in 2001 and 2002 that it could not vouch for the insurer’s accounting and internal financial controls, according to a story in the Washington Post.

The audit committee, whose responsibility is to oversee the work of the outside accounting firm PWC, reported in AIG’s annual corporate filings for those years that it could not independently confirm that AIG management “maintained appropriate accounting and financial reporting principles.”

According to the Washington Post, the committee also commented that it could not assure that PWC was truly acting in an independent role.

The story notes that it is not entirely unusual for audit committees to include language which casts doubt on the independence of the accounting firm, but it also quotes accounting experts that the language used by the AIG audit committee was unusually strong.

A spokesman for PWC told the Post that similar language has been used by other large companies and would not have been seen as a “red flag” by auditors.

The audit committee’s caution has been cited in a lawsuit brought by the attorney general of Ohio against AIG accusing the insurer of securities fraud and PWC of issuing “false and misleading” financial reports on AIG.


May 22, 2005

Grand Jury Investigating AIG


A grand jury is probing potentially criminal conduct by individuals at insurer giant American International Group Inc., including former top management.

This week, attorneys from New York Attorney General Eliot Spitzer’s office began offering evidence to the jury that could result in criminal indictment of one or more individuals, The Wall Street Journal reported on its Web site late Friday….

AIG senior executive Joseph Umansky has testified before the grand jury, the Wall Street Journal reported. AIG’s former longtime CEO and chairman, Maurice R. “Hank” Greenberg and former Chief Financial Officer Howard I. Smith are expected to be the focal point of the grand jury investigation.

The SEC, the New York attorney general’s office, the New York Insurance Department and the Justice Department have been examining Greenberg’s role in initiating a transaction with General Re, a reinsurance subsidiary of Berkshire Hathaway Inc., that allowed AIG to inflate reserves against future claims – an important measure of an insurer’s strength.

AIG said in late March that it did not account correctly for that transaction and others….


May 6, 2005

Greenberg Reported Target
of Stock Inquiry

Insurance Journal

The former CEO of American International Group Inc. is once again making headlines.

According to the New York Times, federal prosecutors are looking into whether Maurice Greenberg reportedly was in charge of an effort to manipulate the stock price of AIG in his last weeks as CEO.

Citing unidentified people officially briefed on the inquiry, the newspaper reported an executive with the company’s trading group informed the company late last week that he had chatted with Greenberg about AIG’s stock price in February, when it had started to quickly decline. People who heard a recording of the conversations report Greenberg is said to be instructing the trader to buy shares of AIG, according to the newspaper said. Such purchases could violate federal securities law.

The conversations between the trader and Greenberg were caught on a recording system used by the trading division, according to the sources. The recordings were listened to by the company and its lawyers, and then sent to prosecutors with the U.S. attorney’s office in Manhattan and the Securities and Exchange Commission.

Federal prosecutors have subpoenaed all of AIG’s recordings from its trading group, which reportedly go back as long as two years ago, according to the sources.


May 5, 2005

FBI Targets Insurance Industry in
Widening Fraud Probe

Insurance Journal

The insurance industry, already under scrutiny by state and federal authorities for various practices, now faces another questioner.

The Federal Bureau of Investigation has launched a probe of the insurance industry that targets some of the accounting mistakes found at American International Group to see how widespread the problems might be.

The FBI review is not confined to insurer accounting but is also looking into agents and brokers who may be diverting premiums for their own use and into the operations of workers’ compensation plans sold by professional employer organizations (PEO).

The FBI said its agents are talking to industry executives and regulators as well as looking for patterns in existing complaints and civil records.

“We do not want to be caught napping on this,” Chris Swecker, an assistant director at the FBI who oversees the financial crimes unit, told The New York Times. “We are taking a very, very hard look at this to see if it represents a pervasive problem.”

The FBI said it would conduct traditional investigations as well as “utilize sophisticated techniques, to include covert undercover investigations, to apprehend the fraudsters.”…

Insurance fraud continues to maintain a top investigative priority due in large part to the insurance industry’s significant status as one of the largest U.S. industries (more than doubling the Gross Domestic Product contributions of the securities industry),” said the report, which points out that the insurance industry consists of more than 7,000 companies with over $1 trillion in premiums each year.

Among the FBI’s concerns is that the “insurance industry is in the midst of technological and regulatory changes which will result in foreign insurance entities playing a larger role.” The report maintains that regulation of the industry is becoming more difficult as more foreign players enter the market.

The FBI said it is working with the National Association of Insurance Commissioners to identify “the top echelon fraudsters defrauding the insurance industry and most prevalent schemes within the insurance industry.”…

The Times said that the FBI official suggested this could be “the next big one,” apparently referring to the 1980’s savings and loan crisis and the more recent headlining corporate fraud cases at Enron and other big firms.”...

The FBI has also recently joined the International Association of Insurance Fraud Agencies, an international non-profit organization which addresses insurance and insurance-related financial crimes on a global basis.

~ ~ ~

 (A Catbird Note: If any of you insurance industry insiders would like to assist the FBI in their investigations, you can GO TO >


April 26, 2005

Shady Business At AIG

By Bernard Condon, Forbes

The American International Group board was advised by outside counsel as far back as 1992 that the workers’ compensation practices now under scrutiny were illegal, according to a person familiar with the matter.

The New York Attorney General Eliot Spitzer announced earlier today that a recently uncovered “internal memo” earlier that year stated that a company practice of under-reporting workers’ compensation premiums to cut its mandated contributions to state funds was illegal.

That document was written by a “former senior executive,” say two people briefed on the document. One of those sources tells that the board then asked for a second opinion from Sullivan & Cromwell, and that the law firm reported back “a few months later” criticizing the ex-employee’s memo as somewhat dramatic but supporting its conclusion….

The practice involved booking workers’ comp premiums as general liability ones. Than enabled the company to avoid paying its “true share” into various state funds, according to Spitzer’s office. Spitzer says the internal document from 1992 estimated “unlawful benefits” at “tens of millions” of dollars annually.

Spitzer’s office and the New York Insurance Department say they plan to hire a consultant to audit AIG’s workers’ compensation policies over more than a decade….

AIG is under investigation by regulators for reinsurance deals that act more like loans, and have helped artificially boost the giant company’s reserves. The company has admitted that it secretly controlled offshore companies that now need to be consolidated on its financial statements.

The company last month said it will need to restate its shareholders’ equity by as much as $1.8 billion, or 2% of the total.


April 20, 2005

Insurance Cos. Eyed By Global Watchdogs


The United States promoted the formation of the Financial Action Task Force during the 1989 G-7 Summit, motivated by the global range of the money-laundering problem and the competitive disadvantage its own anti-money-laundering regime imposed on its financial sector.

The FATF has helped develop a coordinated international response to money-laundering, which is defined as taking illicit proceeds and moving them into the legitimate economy. The FATF initially put forth 40 recommendations intended to help national governments implement effective anti-money-laundering regimes; these were first revised in 1996 and then further updated in 2003….

The FATF promotes policies at the national and international levels to combat money-laundering and terrorist-financing….

In October 2001 the FATF expanded its remit beyond its original mandate of traditional money-laundering to cover terrorist finance, which has been describes as “reverse money-laundering,” in that it takes legitimate sources of funds and turns them toward illicit ends….

The FATF currently consists of 33 full member, including 31 countries and territories, and two regional organisations. Members are mainly drawn from advanced countries but also include the European Commission and the Gulf Cooperation Council (GCC) – Dahrain, Kuwait, Omar, Qatar, Saudi Arabia and United Arab Emirates….

The FATF has become increasingly concerned that some money-laundering activities are migrating from banks to other parts of the formal financial sector. Therefore, the FATF is currently working on a report, scheduled to appear in June, which analyzes the role of the insurance sector in money-laundering. This exercise could lead to additional recommendations concerning the “best practices” to discourage money-laundering within this sector.

However, any additional scrutiny of problematic practices in the insurance sector comes at a difficult time as, in the United States, insurance firms such as Marsh & McLennan (nyse: MMC), Ace (nyse: ACE), AIG (nyse: AIG) and Berkshire Hathaway’s (nyse: BRKA) General RE unit are facing significant scrutiny by various state and federal regulators for various transgressions, including fraud, bid-rigging and improper transactions.

The FATF remains the principal international policy-making body dedicated to coordinating efforts to counter money-laundering and shut down terrorist finance. … Later this year, the FATF will probable extend its sectoral reach by making new recommendations covering the insurance sector….


April 18, 2005

AIG Accountant on Leave

By Matthew Goldstein, The Street

The former comptroller for American International Group (AIG:NYSE) , who was promoted earlier this year to senior vice president, has taken a leave of absence from the giant insurer, which is embroiled in a far-reaching accounting scandal.

A person answering the phone for Michael Castelli said the 16-year AIG executive was “on leave.”…

An AIG spokesman said he could not immediately comment on Castelli’s status.

However, a source said Castelli was seen Friday being escorted out of AIG’s corporate offices in Lower Manhattan by several security guards.

From 2000 through December 2004, Castelli was AIG’s comptroller and chief accounting officer. He had reported to former AIG Chief Financial OfficerHoward Smith, who was fired by AIG’s board on March 22 for refusing to cooperate with the joint state and federal investigation.

The board ousted Smith after he asserted his constitutional right against self-incrimination during an interview with investigators looking into allegations that AIG used accounting games and offshore reinsurers it secretly controlled to dress up its corporate books.

The investigation of AIG has led to the dismissal of a number of other executives, including the forced resignation of Maurice Greenberg, the insurance executive who ruled AIG with an iron fist for nearly four decades.

Before joining AIG, Castelli was in the insurance industry practice at PricewaterhouseCoopers. The big accounting firm is AIG’s auditor…


April 12, 2005

Groups to Consider
Suing AIG for $400M


Leaders of the nation’s largest public retirement systems said Tuesday they will ask their boards to approve suing troubled insurance giant American International Group, Inc. to recover $400 million in losses suffered since the company’s problems surfaced in February.

Treasurer Phil Angelides, a board member of the $182.9 billion California Public Employees Retirement System and $125 billion California State Teachers Retirement System, said “allegations of scandal and misconduct” at AIG have caused “grievous damage” to holdings of more than 2 million California retirees and employees.

The losses are beyond the realm of excessive,” said CalPERS President Rob Feckner, who said he will ask the full CalPERS board on April 20 to begin legal action against AIG, its executives and auditors. CalSTRS will consider the request in its May 4-5 meeting….

California’s funds hold more than $1 billion worth of AIG stock 20.9 million shares. The shares rose $1.10 or 2.1 percent, to close Tuesday at $53.20 on the New York Stock Exchange, near the low end of a 52-week range of $50.15 to $77.36….

California’s losses on AIG stock – $240 million at CalPERS and $160 million at CalSTRS – come three years after the two funds lost $1 billion from the 2001 collapse of energy giant Enron Corp. and telecommunications giant WorldCom Inc. in 2002.

“Four hundred million in losses means a direct hit to the taxpayers of California,” said Angelides, a Democrat and announced candidate for governor next year.

“That’s money that’s not in our pension fund to meet retirement obligations of teachers, police officers and firefighters.”

Federal authorities are probing reinsurance transactions booked by AIG, the world’s largest insurer. Investigators say the company bought reinsurance from General Reinsurance Corp. in the fourth quarter of 2000 and first quarter of 2001, but allege AIG used the deal to pump up its reserves when markets were uneasy about the company’s outstanding liabilities.

The probe forced the resignation last month of chief executive officer Maurice “Hank” Greenberg, 79.

For more pension losses, GO TO > > > The Great Nest Egg Robberies


April 12, 2005

Greenberg Takes 5th Amendment in AIG Case


Maurice “Hank” Greenberg, the former chief executive of American International Group Inc., declined on Tuesday to answer questions posed by government investigators probing transactions at the insurance company he once headed.

The morning deposition lasted about 45 minutes, according to a person who attended the meeting but asked not to be identified by name. The person said Greenberg invoked his Fifth Amendment rights against self-incrimination in response to all questions….

Greenberg, 79, was forced to resign as CEO of AIG in mid-March and, as the probe widened, relinquished his title as chairman.

Before Tuesday’s session began, Joseph Fritsch, director of insurance accounting policy in the New York state insurance department, told reporters that investigators “have 40 pages of questions” for Greenberg.

He said that other AIG executives would likely be called for questioning, and that new information from them could result in a fresh subpoena for Greenberg….


April 13, 2005

Did Greenberg Transfer $2.2 Billion Of Shares
To Wife To Shield Assets?

By Chris Noon, Forbes

 “You Can’t Touch This”, sang MC Hammer….

A similar sentiment could be on Maurice R. “Hank” Greenberg’s mind: Yesterday it transpired that the former AIG chief shifted over $2 billion worth of his company shares into his wife’s name just days before directors pushed for his resignation.

Greenberg disclosed the transfer after invoking his Fifth Amendment rights against self-incrimination in response to all questions from U.S. state and federal regulators who are probing questionable transactions by AIG. There has been speculation that Greenberg may have been attempting to guard his wealth from lawsuits that might stem from the investigation by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission.

Greenberg transferred 41.4 million shares – worth $2.2 billion at yesterday’s closing price of $53.20 – to his wife Corinne P. Greenberg, three days before resigning as president and chief executive of AIG.

At the same time Greenberg denied “any pecuniary interest” in another 23.65 million AIG shares held through C.V. Starr, a unit that controls AIG managers’ compensation....


April 11, 2005

Tough Questions For AIG’s Auditors

Regulators are probing if PwC let the
financial shenanigans slip through

By Joseph Weber, Mike McNamee, Marcia Vickers & Diane Brady
Business Week

Where were the auditors? Now that American International Group Inc. has admitted to a clutch of accounting improprieties and is mulling whether to restate its past results, an all-too-familiar question is emerging: Why didn’t the auditor catch what was going on?

Were misdoings hidden from AIG’s longtime auditing firm PricewaterhouseCoopers, or did the firm turn a blind eye to problems it should have seen? Indeed, some of the searing heat that has so far felled AIG Chief Executive Maurice R. “Hank” Greenberg and several other execs could soon scorch the $17.5 billion accounting giant….

Because of its role as a dominant force in auditing and accounting for insurance companies, PricewaterhouseCoopers’ outfit is bound to get an especially close going over from regulators and shareholders alike. Certainly. the outfits were close. PwC or its predecessor companies, such as Coopers & Lybrand, had done work for AIG going back more than 20 years.

How deep were the ties? Recently ousted Chief Financial Officer Howard I. Smith, whom AIG fired for refusing to cooperate with investigators in the latest probes, had worked at Coopers & Lybrand for 19 years and was the head partner in its New York insurance practice before joining AIG in 1984…

More important, PwC was AIG’s auditor through its long years of questionable dealings. AIG on Mar. 30 said that deals with a Barbados-based insurance company, for instance, may have been incorrectly accounted for over the past 14 years, because an AIG-affiliated company may have been secretly covering that insurer’s losses.

If AIG has to unwind its dealings with the Barbados company, it may be forced to take a big earnings hit.

For more poop on PricewaterhouseCoopers, GO TO > > > What Price Waterhouse?


April 8, 2005

AIG seen struggling to meet deadline

Observers say the embattled insurance firm will be
issuing updates to its statements for months.


NEW YORK (Reuters) – American International Group Inc. has assured investors it will work “around the clock” to finish its accounting review, but concerns remain over whether it can avoid missing another deadline for filing its annual report….

A source familiar with the probe said the process is so complex that there was a likelihood that AIG may not even be able to file the 10-K by its April 30 deadline. “They still have a lot of outstanding items and transactions that have not been looked at at this point,” the source said….

PricewaterhouseCoopers, the accountants for AIG, declined to comment.

AIG’s review is covering much the same ground as probes by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission, which sources have said are examining everything from reinsurance deals with offshore entities to the suspect accounting for a transaction with Berkshire Hathaway Inc.’s General Re.

One deal AIG has said it is probing dates back 14 years.

And while Spitzer said this week he expects to reach a civil settlement with AIG – rather than bring criminal charges – investigators and the company cannot begin to work out a deal until dozens of deals are vetted….

One challenge to the investigation is the sheer size of AIG: 90,000 workers and operations in 130 countries. In its 113-page annual report from 2003, the company listed about two dozen significant subsidiaries involved in the insurance businesses, financial services and retirement services.

And beyond Spitzer and the SEC, regulators in Ireland and Bermuda are involved in the probe….


April 7, 2005

AIG execs ran Bermuda insurer

CNN Money

NEW YORK (Reuters) – American International Group Inc. executives managed a Bermuda reinsurance company that AIG had said was not affiliated with it but that may have been used to burnish the insurer’s financial results, the Wall Street Journal reported Thursday….

The report of the arrangement comes as regulators scrutinize AIG’s relationships with offshore reinsurers in which it had an interest. Regulators want to know if AIG used them to hide liabilities or to artificially boost income.

Astral Reinsurance Co. acted as a reinsurer for AIG from 1984 through 1998, theJournal said, citing regulatory filings.

The Bermuda-based company controlled more than $1.8 billion of AIG stock and was managed for more than two decades by top AIG executives, including Michael Murphy, AIG’s Bermuda-based legal counsel whose employment was recently terminated by AIG for his refusal to co-operate with regulators’ investigations….


March 28, 2005

AIG Chair Greenberg to Retire Amid Probe


Maurice “Hank” Greenberg will retire this week as chairman of American International Group Inc., ending a four-decade career with the insurance company as regulators investigate questionable financial transactions that occurred during his tenure….

There had been widespread speculation about how long New York-based AIG would continue its relationship with Greenberg, as investigations by the Securities and Exchange Commission and New York State Attorney General Eliot Spitzer have intensified in recent weeks….

Greenberg is scheduled to give a deposition to Spitzer on April 12….


March 28, 2005

Source: SEC Subpoenas 12 AIG Executives


The Securities and Exchange Commission has sent subpoenas to a dozen executives at American International Group Inc. amid several probes into whether questionable transactions were used to improperly bolster the insurance titan’s financial standing, a person familiar with the matter said Monday.

The person, speaking on condition of anonymity and confirming a report Monday in The Wall Street Journal, also said federal investigators were aware of 10 transactions that warranted review….

[Maurice R.] “Hank” Greenberg ,79, was replaced as chief executive two weeks ago – though retained as chairman – as regulatory scrutiny mounted over a 2000 transaction that appeared to have been used to boost the company’s reserves artificially….

Under investigation are a number of reinsurance transactions – insurance purchased by insurance companies – that regulators contend were designed to improve AIG’s financial statements without the transfer of risk. Risk transfer is necessary for a deal to be an insurance transaction and determines how it’s carried on a company’s books.

On Sunday, the company forced out another longtime executive, Michael Murphy, a confidante of Greenberg and an expert of tax matters who is based in Bermuda, the Journal reported citing unidentified sources.

AIG spokesman Chris Winans said Murphy was terminated “for failure to cooperate with investigators.”…

A number of other AIG executives have been dismissed, including four who entered guilty pleas in the probe launched by Spitzer into bid rigging and price fixing by New York-based broker Marsh & McLennan Companies Inc.


March 25, 2005

AIG’s Accounting Concerns Grow


American International Group Inc., one of the world’s biggest insurance companies, is considering a move to clean up suspected accounting mistakes that may total as much as $3 billion from as many as 30 insurance transactions, The Wall Street Journal reported in Friday’s editions.

The Journal, citing unidentified sources familiar with the case, said potentially problematic accounting now being examined is far broader than was believed just a week ago.

AIG has yet to assess an additional 60 transactions that internal investigators have identified as possibly problematic, one person familiar with the matter told the Journal. A number of senior AIG executives were aware of many of these transactions, which could subject them to regulatory scrutiny, the source told the newspaper….

Last week, questions over AIG’s accounting of an insurance transaction with a Berkshire Hathaway Inc. unit led to the ouster of Maurice R. “Hank” Greenbergas AIG’s chief executive after nearly four decades at the helm. Investigators continue to examine whether AIG misled investors by manipulating its books.

This week, AIG, which has pledged to cooperate with investigators, fired its chief financial officer and a senior reinsurance executive after they decided not to answer some questions on the grounds that their answers might be self-incriminating….


March 22, 2005

AIG Fires 2 Execs for Failure to Cooperate


American International Group Inc. one of the world’s biggest insurance companies, fired two top executives for failing to cooperate with government investigators, a spokesman for the company said Tuesday.

The dismissals of Howard I. Smith, who had been AIG’s chief financial officer, and Vice President Christian M. Milton, were first reported in Tuesday editions of The Wall Street Journal.

AIG spokesman Chris Winans said that the men were terminated because of company policy “that requires employees to cooperate with government authorities on matters pertaining to the company.”

The Journal said AIG took action after the men signaled they would invoke their Fifth Amendment rights against possible self-incrimination amid a probe into whether AIG manipulated its books to mislead investors….

The Journal said both Smith and Milton were likely to be knowledgeable about a transaction under scrutiny by federal and state regulators involving General Re Corp., a unit of Berkshire Hathaway Inc.

Smith reportedly met Monday with investigators from the offices of New York Attorney General Eliot Spitzer and the Securities and Exchange Commission….

The probe by Spitzer, the SEC and federal prosecutors involves a complex deal involving reinsurance, which the investigators allege may have been used to manipulate AIG’s books rather than spread risk. AIG reportedly booked $500 million in premium revenue from General Re and then added $500 million in reserves to its balance sheet. The transactions took place in late 2000 and early 2001….

The Journal also reported Tuesday that regulators have expanded their probe into AIG’s reinsurance dealings to include the company’s relationships with two obscure reinsurers – Union Excess Insurance Co. and Richmond Insurance Co., both located in Barbados.

At issue, the paper said, is whether Union Excess and Richmond Insurance are independent companies or under AIG’s control and whether AIG properly accounted for transactions with the companies.


March 15, 2005

AIG Turns to a Slate of New Leaders


American International Group Inc. shuffled its management team, removing longtime CEO Maurice “Hank” Greenberg, in a first step toward trying to resolve widening federal and state probes into its property and casualty insurance business….

Unnerved shareholders pushed AIG stock down $1.96, or more than 3 percent, to $61.89 in afternoon trading on the New York Stock Exchange….

AIG’s board said Greenberg, 79, would retire from the chief executive post he held for nearly four decades but will remain nonexecutive chairman of the New York- based company.

British-born Martin J. Sullivan, 50, who had served as vice chairman and co-chief operating officer, was named CEO – only the third man to hold the post since AIG’s founding in 1919.

The board said that Steven J. Bersinger would be given the title of chief financial officer. It said Berisinger was replacing Howard I. Smith, “who has taken leave.” Company officials declined further comment on the matter.

The board also announced that it would delay for at least two weeks the filing of its annual report, which had been expected on Wednesday.

Donald Light, a senior analyst with the research and consulting firm Celent Communications Inc. in Boston, said that investors were spooked by that.

“When a company is in crisis and replaces its CFO, it’s like putting a sign outside the building saying ‘our financial statements are about to change in a bad way,” Light said.

He added that the continuing regulatory probes “will be a distraction for whoever is managing the company.”

New York Attorney General Eliot Spitzer, federal prosecutors and the Securities and Exchange Commission are looking into the use of so-called finite insurance, or financial reinsurance, which they contend can be used to manipulate earnings.

One of the transactions being probed took place between AIG and Berkshire Hathaway Inc.’s General Reinsurance unit four years ago and apparently was intended to shore up AIG’s reserves. Reports have said Greenberg was personally involved.

Ratings agencies moved quickly to downgrade AIG’s debt ratings or put them on watch for downgrading….

An earlier Spitzer probe into bid rigging and price fixing resulted in the resignation of Jeffrey Greenberg last October as chairman and chief executive of the insurance brokerage Marsh & McLennan Companies Inc. Marsh & McLennan reached a settlement in the case Jan 31, agreeing to pay $850 million in restitution.

Evan Greenberg remains president and chief executive officer of Bermuda-based ACE Ltd.

For more, GO TO > > > Ace Up the Sleeve; Confessions of a Whistleblower; Marsh & McLennan: The Marsh Birds


February 16, 2005

3 from AIG and Marsh
admit insurance fraud

Bloomberg News

Two executives from American International Group and one from Marsh & McLennan pleaded guilty Tuesday to fraud charges resulting from a sweeping investigation into the insurance industry by the New York State attorney general, Eliot Spitzer.

The men, Josh Bewlay, a former managing director in Marsh’s global broking unit, and Carlos Coello and John Mohs of AIG, pleaded before a New York State Supreme Court judge, James Yates. Coello is an underwriter in an AIG liability insurance unit and Mohs has worked as an assistant vice president in the same unit, their lawyers said.

Spitzer, who is investigating kickbacks and collusion between insurers and brokers, has charged six other executives from Marsh, AIG, Ace and Zurich Financial Services since he sued Marsh on Oct. 14.

Marsh, the largest insurance broker in the world, ousted its chief executive and agreed last month to pay $850 million to settle its case.

Bewlay, Coello and Mohs were led out of a New York Police Department precinct in Lower Manhattan in handcuffs before appearing in court….


January 8, 2005


By Diane Levick, The Hartford Courant

The St. Paul Cos. – now part of The St. Paul Travelers Cos. – was among the insurers that benefited from alleged bid-rigging by broker Marsh Inc., the New York attorney general’s office said.

A court document released Thursday on the guilty plea of a Marsh senior vice president draws St. Paul Travelers into the controversy, but does not make clear whether the insurer intentionally participated in any wrongdoing….

Robert Stearns, an executive in Marsh’s excess casualty business, pleaded guilty in a New York court Thursday to the felony of scheming to defraud in the first degree. It was the sixth guilty plea in a far-reaching probe of the insurance industry by New York Attorney General Eliot Spitzer.

Stearns asked various insurers to submit bids that were less favorable than others, so Marsh could steer business to maximize its profits and protect incumbent insurers on certain accounts that were up for renewal, the felony complaint says.

The sham bids were sometimes called “B Quotes” or simply “B”.

In one example in March 2003, Stearns asked a Marsh broker in an e-mail to get a B quote from insurer Zurich on an account that would be renewing insurance with St. Paul, the complaint says. Stearns suggested “325,000 should work” because St. Paul’s price was $270,000, the complaint says.

Later that day, Stearns repeated the request, and the next day, a Zurich underwriter provided a $360,000 quote to Marsh, the document says.

In another March 2003 example, Stearns was asked by another Marsh executive to get B quotes on an account that was up for renewal with American International Group. “Further e-mails reflect that Zurich, ACE, and St. Paul subsequently offered losing quotes on this account,” the complaint states.

The document does not say whether St. Paul knew its quote for the account would be used in bid-rigging.

However, a Marsh broker’s e-mail that was cited in the document strongly implies he considered the B quotes laughable, as the broker told an ACE underwriter: “need a B for [expletive] and giggles.”

The client renewed insurance with American International Group.

St. Paul Travelers was not named in Spitzer’s bid-rigging lawsuit against Marsh in October, though the suit implicated several insurers including The Hartford Financial Services Group Inc. without naming them defendants.

However, Spitzer’s office has subpoenaed information from St. Paul and dozens of other companies.

Meanwhile Friday, Spitzer said he expects the guilty pleas he has gotten so far will lead to more charges.

“We are laying the foundation with these criminal cases that permit us to make criminal cases and bring criminal actions against those more senior within the companies,” Spitzer said after a state assemble hearing in New York, according to Bloomberg News.

In addition to Stearns, guilty pleas have come from two executives at AIG, two from Zurich American Insurance Co. and one from ACE.

In another development, Marsh & McLennan Cos. Inc. said Friday it has named E. Scott Gilbert to the new post of senior vice president and chief compliance officer effective Jan. 24. He was chief compliance counsel for the General Electric Co.

For more, GO TO > > > Confessions of a Whistleblower; Claims By Harmon; Claims By Harmon: The St. Paul Travelers; New Songs by The Whistler


November 17, 2004

Cooking the Insurance Books

A Decade of Lax Regulation Lays Groundwork for Scandal

By Lucy Komisar, Special to CorpWatch

In October, New York Attorney General Eliot Spitzer filed suit against the world’s largest insurance broker, Marsh, accusing it of rigging bids and receiving kickbacks in order to defraud clients such as other corporations, city governments, school districts and individuals of billions of dollars through inflated premiums.

“Greedy trial lawyers were the usual excuse for premium increases. Now we know that greedy corporations also have a starring role,” Spitzer said, accusing several insurance companies as co-conspirators in making phony or inflated bids and paying kickbacks to the brokerage to get business.

Spitzer also announced that two executives from the insurance conglomerate American International Group (AIG) had already confessed to related criminal charges. But his investigations into AIG may have only scratched the surface. A paper trail stretching back a decade reveals that AIG used offshore shell companies to skirt the law.

The current scam which Spitzer has uncovered works like this: Marsh, an insurance broker, is supposed to find the best insurance policies for its clients from a wide range of companies. Instead it steered the policies to companies such as AIG that agreed to pay kickbacks.

It solicited phony competitive bids for insurance contracts to deceive customers into thinking there was real competition for the business. Marsh made $800 million on kickbacks in 2003 alone – over half its $1.5 billion profit. With a 40-percent share of the global insurance brokerage market, its fraud drove up prices for everyone….

Lax Regulators Give AIG a Free Pass

At Spitzer’s press conference, New York State Insurance Superintendent Gregory V. Serio said: “This has gone from an inquiry into failure to disclose compensation to an active investigation of bid rigging and improper steering. This certainly proves the adage that where there is smoke, there is fire.”

But AIG’s comportment could not have been much of a surprise to Serio, who was New York’s deputy insurance superintendent in the late 90s. That’s when New York and three other states gave the powerful company a pass on some very questionable practices. If they had paid attention to the smoke then, perhaps this billion-dollar fire wouldn’t have ignited.

In the late 90s, four state insurance departments – New York, Delaware, Pennsylvania and California were aware that AIG was moving debt off its books via the use of an offshore shell company it secretly set up and controlled. But despite clear evidence of wrongdoing, no sanctions were ordered….

In the mid-80s, two of AIG’s reinsurers failed. The bankruptcy liquidators paid creditors, including AIG, over several years but meanwhile the amount owed was liable to show up as unacceptably high levels of debt on the AIG books.

Trevor Jones, an insurance investigator who for 20 years has run Insurance Security Services in London, explained,Hank [Greenberg] decided to set up Coral Re [a reinsurance company] to move the debts he couldn’t claim as assets into this other company. … No real company would play ball, because you are fiddling the accounts, moving your bad debts off your books.”

So AIG went to elaborate lengths to set up a shell company in Barbados, where capital requirements and regulation was minimal compared to the U.S., where American regulators couldn’t readily discover AIG’s involvement and where, as an added incentive, it could move money out of reach of U.S. taxes….

Though it is an American company listed on the New York Stock Exchange, AIG makes extensive use of offshore jurisdictions such as Barbados, Bermuda and Luxembourg that are immune from U.S. regulatory and tax scrutiny. They help the company launder profits to evade U.S. taxes and hide insider connections in supposedly “arms-length” deals. This is especially important as the company has moved into financial services and asset management, handling the wealth of “high net-worth” clients – the mega-rich.

Greenberg has enviable political clout, never so much in evidence as when, with the help of Henry Kissinger – chair of AIG’s international advisory committee and a paid consultant via Kissinger Associates – AIG became in 1995, the first company licensed to sell insurance in China. AIG was the only foreign firm that owned 100 percent of its license there….

Goldman Sachs and Robert Rubin

Coral Re, a Barbados reinsurance company, was launched with a private sale of shares organized by Goldman Sachs, then headed by Robert Rubin, who would become President Clinton’s Treasury Secretary and is now chairman of the executive committee of Citigroup.

A confidential memorandum … told why the company was formed: “AIG’s interest in creating the Company is to create a reinsurance facility which will permit the U.S. companies to write more U.S. premiums. For a U.S.-domiciled company, a high level of surplus is required to support insurance premiums in accordance with U.S. statutory requirement. The statutory requirements in Barbados are less restrictive.”…

Rubin buddy Bill Clinton, then governor of Arkansas, may also have thrown his weight behind the project. The Arkansas Finance and Development Authority(ADFA), headed by a man who went to work in the Clinton White House, became lead investor, although state law banned it from buying stocks.

The new company was not a legitimately independent business. For investors, there was no money at risk; the board of directors never made a decision; and Coral Re had no office of its own but was managed by American International Management, a subsidiary of none other that AIG.

Eventually, the scheme unraveled. State insurance examiners look at company books every five years. “In 1992, Delaware examiners auditing Lexington (an AIG subsidiary) smelled a rat,” a former regulator from one of the four investigating insurance departments told CorpWatch….

Things have gotten tougher for the company since the Enron affair caused the SEC to look more serious about corporate corruption. … Last year, AIG paid a $10 million fine to the SEC for helping the Indiana wireless telecom company Brightpoint commit accounting fraud.

AIG marketed a “non-traditional” insurance product aimed at “income statement smoothing,” spreading a loss over future reporting periods. The SEC called such financial products “just vehicles to commit financial fraud” and said the insurance giant refused to give it subpoenaed documents, compounding its misconduct. The U.S. Justice department is currently investigating but has yet to file criminal charges.

Business Insurance, a trade publication, editorialized on the timidity of regulators for giving AIG “little more than a tap on the wrist” in exchange for “a promise not to do it again.”

“The message delivered here is that a company of AIG’s power and complexity can afford to be openly hostile to state oversight and, in the end, have things pretty much its own way. That is a disheartening message, indeed,” wrote the magazine’s editors….

(Read the complete article in CorpWatch)

Lucy Komisar is an investigative journalist who is writing a book about offshore bank and corporate secrecy. She receive research assistance on this report from the Arkansas Committee. The committee was started in 1990 by University of Arkansas students, who, suspicious that Arkansas Development Finance Authority was selling more bonds than it could use to finance state projects, demanded the agency’s documents under the Freedom of Information Act. It fought the case to the Arkansas Supreme Court before it got the papers describing the AFDA deal to buy shares of Coral Re.


October 16, 2004

Guilty Plea in Insurance Inquiry
as Stocks Fall

A third insurance company executive pleaded guilty yesterday to criminal charges in connection with New York state Attorney General Eliot L. Spitzer’sinvestigation of payoffs and bid-rigging in the insurance industry.

Patricia Abrams, assistant vice president in the excess casualty division of ACE Ltd., pleaded guilty in state court in Manhattan to attempted combination in restraint of trade, a misdemeanor, acknowledging that she had helped Marsh & McLennan Cos. brokers rig bidding for corporate liability insurance policies.

Spitzer caught Abrams saying in a December 2000 e-mail that she increased ACE’s bid for a particular policy from $990,000 to $1.1 million because Marsh brokers wanted another company, American International Group Inc., to win the business.

Abrams is cooperating with Spitzer’s office.

Marsh & McLennan, the nation’s largest insurance broker, said yesterday it is suspending its practice of using “market services agreements” with insurance carriers, which Spitzer has alleged were used to rig bids.

The agreements – also known as contingent commissions or placement service agreements – are at the center of a lawsuit he announced Thursday accusing New York-based Marsh & McLennan of taking payoffs from insurance companies to steer corporate clients their way, rather than get those customers the best prices for corporate property and casualty policies….

On Friday, the chairman and chief executive of AIG, Maurice R. “Hank” Greenberg, said in a conference call with analysts that the company had launched its own investigation of the allegations, using outside investigators, and is cooperating fully with Spitzer’s office.

Hank Greenberg, who is the father of the Marsh & McLennan chief executive, told analysts that AIG had sought guidance from New York state insurance regulators about contingent commissions long before Spitzer’s investigation began.

He said that AIG queries in July 2002 and in October 2003 were unanswered….

~ o ~

(Catbird Note: For an earlier case of alleged corruption, collusion, racketeering, bid rigging and price fixing involving Marsh & McLennan, The Chubb Group, and other birds of a feather, GO TO > > > Confessions of a Whistleblower; Harmon’s Claim Letter to John Sinnott;Harmon’s Letters to Insurance Commissioners; RICO in Paradise; Claims By Harmon)


February 6, 2004


Insurer donates to his presidential campaign

By John Solomon, Associated Press

WASHINGTON – John Kerry intervened in the Senate to keep open a loophole that had allowed a major insurer to divert millions of federal dollars from the nation’s most expensive construction project, then received tens of thousands of dollars in donations from the company during the next two years, documents show.

American International Group paid Kerry’s way on a trip to Vermont and donated at least $30,000 to a tax-exempt group Kerry used to set up his presidential campaign. Company executives also donated $18,000 to his Senate and presidential campaigns, according to records obtained by The Associated Press.

But Kerry, the current leader of the Democratic presidential race, says there was no connection between his actions in 2000 and the donations that followed in 2001 and 2002….

The Massachusetts senator said he had worked in 2000 to block the legislation solely because it would have cost Boston’s “Big Dig” $150 million.

The legislation would have closed a loophole that had allowed the American International Group to divert millions of federal dollars from the project for its own use.

Basically, Big Dig managers had overpaid American International almost $130 million for unneeded insurance, then allowed the insurer to invest it in the market….

John Kerry has long supported getting special interest money out of the political system,” campaign spokeswoman Stephanie Cutter said. “If anybody believes that a political contribution influences John Kerry then they are wasting their money.”

But some government watchdogs said Kerry’s story is a textbook case of Washington special interest politicking that he rails against on the presidential trail.

“The idea that Kerry has not helped or benefitted from a specific special interest, which he has said, is utterly absurd,” said Charles Lewis, head of the Center for Public Integrity, which just published a book on political donations to the presidential candidates.

“Anyone who gets millions of dollars over time, and thousands of dollars from specific donors, knows there’s a symbiotic relationship,” Lewis said.

“He needs the donors’ money. The donors need favors. Welcome to Washington. That is how it works.”

The documents obtained by the Associated Press detail Kerry’s effort as a member of the Senate Commerce Committee to persuade committee chairman John McCain, R-Ariz., to drop legislation that would have stripped $150 million from the Big Dig project and closed the insurance funding loophole….

When the “AIG investment scheme (came) to light, John Kerry called for public hearings to investigate the parties involved and the legality of the investment practices. However, he firmly believed cutting funding for the Big Dig was not the answer,” Cutter said.

 Instead of McCain’s bluntly worded legislation, Kerry asked for a committee hearing in May 2000. Kerry thanked McCain at the start of the hearing for dropping his legislation and an American International executive was permitted to testify that he believed the company’s work for the Big Dig was a good thing even though it was criticized by federal auditors.

Asked why Kerry would subsequently accept a trip and money from American International in 2001 and 2002 if he was concerned by the investment scheme, Cutter replied: “Any contributions AIG made to the senator’s campaign came years after the investigation.”

The New York-based insurer, one of the world’s largest, declined to comment on its donations to Kerry, simply stating, “AIG never requested any assistance from Senator Kerry concerning the insurance we provided the Big Dig.”

The Big Dig project has become a symbol of government contracting gone awry, known for cost overruns that now total several billion dollars and its admissions of mismanagement.

During the 1990s, Sens. Kerry and Edward Kennedy, D-Mass., helped win new federal funding for the project as its costs skyrocketed and threatened to burden the state’s government. In 1998, Kerry was credited with winning $100 million in new federal funding.

But in 1999, Transportation Department auditors discovered that Big Dig managers had overpaid $129.8 million to American International for worker compensation and liability insurance that wasn’t needed, then allowed the insurer to keep the money in a trust and invest it in the market.

The government alleged American International kept about half of the profits it made from the investments, providing the other half to the project.

In September 2001, American International paid an estimated $540 in travel expenses to cover Kerry’s costs for a speech in Burlington, Vt., according to a Senate report filed by Kerry.

A few months later in December 2001, several company executives gave maximum $1,000 donations to Kerry’s Senate campaign on the same day. The donations totaled $9,700 and were followed by several thousand dollars more over the next two years.

Kerry wasn’t the only committee member to get donations from the insurance company.

In 1999 and early 2000 as the Big Dig issue was pending, McCain received several thousand dollars in donations from executives of the insurer, the records show.


Further proof that AIG is strictly BI-PARTISAN when it comes large campaign contributions:

November 18, 2003

$100K From Special Interest
For Special Session

By Doug Heller, Washington Monthly

Day 2 of the Arnold Administration – If we told you that the governor accepted a huge campaign contribution from the state’s largest private workers’ compensation insurer just before opening a special legislative session on workers’ comp, you’d be sure that we accidently got our wires crossed and were looking at some old story from the Gray Davis files.

And if we added that the governor used a loophole in campaign limits – putting the money in an old campaign committee, so he could accept a donation that is nearly five time larger than contribution limits allow – you’d be sure we had mistakenly opened Cruz Bustamante’s campaign finance disclosures.

That kind of special interest politics-as-usual is exactly what Arnold came to office to clean up, right?

Apparently not.

We have just learned that mega-insurer American International Group (AIG) donated $100,000 to Arnold last week. The company wants to keep insurance rate regulation off the table during the workers’ compensation special session that the governor convened today.

Will Arnold treat AIG equally and look to reform the insurance companies just as he goes after other players in the workers comp debate (namely workers, doctors and lawyers) or will this big contributor get a break?

Arnold told us that things would be different, but already it looks a lot like more of the same.


September 25, 2004

Dobelle legal costs hit $1M

By Vicki Viotti, Honolulu Advertiser

The ouster of former University of Hawaii President Evan Dobelle will cost the university about $1 million in fees from lawyers hired by the Board of Regents to negotiate a settlement and fees for his attorneys, university records show.

And while university officials are still haggling over how much the settlement will finally cost taxpayers, several said yesterday that the legal bill is less than what it would have cost to buy out Dobelle.

The bill, which includes $290,000 paid to Dobelle’s legal team, and an estimated $750,000 due to UH lawyers, enabled the university to avoid at least $4.5 million that would have been paid if Dobelle had been fired without cause and his contract paid off, regent Kitty Lagareta said.

Officials involved in negotiating Dobelle’s exit package said yesterday that talks are ongoing with the UH carrier, National Union Fire Insurance Co. of Pittsburg [a member company of American International Group, Inc.], in hopes that the policy will cover most or all of the costs, including legal bills….

For more, GO TO > > > The Firing of Evan Dobelle


July, 2004


Charles Savoie, Silver Investor

Let’s talk about the People’s Bank of China and its silver vault, from whence has come most of the manipulated silver supply with which to maintain the price suppression, since sometime in 1999. As a gentlemen formally known to us as Theodore first pointed out, the Pan American Silver 2003 annual report … had remarks about some 300 million plus ounces of silver that have found their way out of official Chinese government holdings in the last 4 years, enough to keep the deficit emergency under wraps.

In his April 10, 2002 commentary, “The China Silver Syndrome,” Ted was of the view that China wasn’t dumping its government held silver. … We thought it was rumor, but it turned out to be fact – another ugly fact in a long parade of ugly facts favoring the users and the paper money mob!…

Butler, in keeping with being a news source monitor, informed the silver community of the Reuters story dated June 1, 2004, that American International Group (AIG) just exited the gold and silver markets, and is no longer involved with the COMEX (“CRIMEX”) silver delivery process. The likeliest reason would appear, they cannot access any more Chinese silver, because the Chinese silver vault is EMPTY!

The fact that both Maurice Greenberg of AIG, and his son Jeffrey, a trustee of the anti-silver Brookings Institution (once chaired by Douglas Dillon, Treasury Secretary who took us off silver coins) are both members of the Trilateral Commission, along with Zhou Xiaochuan, head of the People’s Bank of China, places them in an insider’s position for having access to that Chinese silver vault, and for knowing when the depletion is absolute. This, undoubtedly, is why AIG exited the silver market!

Skadden Arps, the law firm Eliot Spitzer came from, represents AIG! We must assume that at some future date when his political career is over, he will want a well-placed job, and will refrain from offending powerful elements, such as coming down on high paying clients of his former law firm!

Fines amounting to a slap on the wrist are merely to appease the public and do NOT constitute justice!

The senior Greenberg also chairs the Asia Society, a British/American influence group over Asia founded in 1956 by John D. Rockefeller 3rd (WMP) and today Senator Rockefeller IV (WMP) is a trustee.

Greenberg is a member of the President’s advisory committee on Trade Policy & Negotiations, in which capacity he backed China’s entry into the World Trade Organization (WTO) in 2002. Additionally, Greenberg chairs the U.S./China Business Council and campaigned for “most favored nation” trade status.

This is someone you would think favors are owed. With China having passed the $400 billion mark against America in foreign exchange totals this represents a considerable danger. We have something called the U.S. Trade Deficit Review Commission that pretends concern, but consider that its members include Wayne Angell, a Federal Reserve governor from 1986 through 1994 and a member of the anti-precious metals American Economic Association; Robert Zoellick, who was on the Enron advisory board, as well as the Goldman Sachs advisory board; and Donald Rumsfeld, Mr. $1.61 an ounce silver from the Nixon era.

Greenberg is a person with all necessary links to Red China for any silver dealings that have taken place. Of course, everything has transpired away from public view and open documentation. It would be amusing to see Greenberg questioned by Congress after the silver scandal erupts; and that outrageous child of his also!

Recall that Barber Conable, ex of the World Bank, is an AIG director; as is Marshall Cohen of Barrick Gold; and Frank Wisner, ex-Ambassador to the Philippines, a country whose central bank leased silver; two Chinese; and William Cohen, ex-Secretary of Defense, who mentioned how the U.S. has “given” military secrets to China (see “Michael Gorham’s Paper Money Mob,” June 2004).

In connection with “Silver Users And Opium” (Archives, March 2004) take note that Cornelius V. Starr, founder of AIG, was linked to drug trafficking in Asia (“The War Conspiracy,” 1972 by Peter Scott, see chapter 6, “Opium, the China Lobby and the CIA”), Maurice Greenberg of AIG is one of the personalities sometimes mentioned as a possible CIA chief!

In any Asian drug trafficking, the so-called Chinese “Triad” mobs are involved at street level. Barclay’s Bank International, London (Committee of 300 World Money Power) is the largest AIG shareholder

It should also be kept in mind that Greenberg is vice chairman of the Council on Foreign Relations, in which some 1500 plus bankers, diplomats, generals, admirals, corporate executives and other establishment wheelhorses hold membership; and that its honorary chairman is David Rockefeller of the World Money Power, who started the China trade in the early 1970’s after discussions with Red leaders….

The traces of the paper money mob and the silver users to China and the Far East are eyebrow raising. Greenberg senior has also chaired the U.S./Philippines Business Council, this of a country suspected of its central bank having taken part in the dirty silver leasing business. Charles Englehard (born 1917), who in 1953 became head of Englehard Industries, Silver Users Association members, was, like Volcker today, a director of Prudential Insurance….

On page 227 of “Beyond Greed—The Hunt Family’s* Bold Attempt To Corner The Silver Market” (Viking Press, New York, 1982), Stephen Fay alleged that it was Charles Englehard who provided the real life model for Ian Fleming’s fictional“Goldfinger,” of James Bond fame!…

See also: Office of the U.S. Trustee vs. HarmonWitness James B. Nicholson


October 28, 2003


MOSCOW – Rich in Russia

From PBS Frontline

Special Update – Oct 28, 2003

Just five days before FRONTLINE/World’s broadcast of “Rich in Russia,”Russian oligarch Mikhail Khodorkovsky was seized at gunpoint by Russian federal agents in Siberia while refueling his private jet. Khodorkovsky’s dramatic arrest and detention on charges of fraud and tax evasion follows a months-long government investigation of his company Yukos.

Khodorkovsky claims the attack is politically motivated, because he has bankrolled the campaigns of opposition party candidates running in the December 2003 parliamentary elections. (President Vladimir Putin is preparing to seek a second term in March 2004.) If convicted, Khodorkovsky could face up to ten years in prison.

~ ~ ~

Mikhail Khodordovsky

Mikhail Khodorkovsky, 40, Russia’s wealthiest man, made his first fortunes in banking. Born in 1963, he was raised in a communal apartment in Moscow by factory worker parents. As a child he talked of becoming a factory director, and later he became an active member in Kommosol (Communist Youth League)….

By 1990, Khodorkovsky had founded Menatep, a bank with profits rumored to be supplemented by funds controlled by various Kommosol, Central Committee and KGB groups attempting to divert state funds. When the old order collapsed, Menatep provided credit to state enterprises and regional offices while they waited for the new government to establish financial flows.

Khodorkovsky also set up a market for state vouchers, and at this time he gained control of several enterprises. Through his holding company, Rosprom, Khodorkovsky snatched up chemical, construction, textile, mining and oil enterprises.

In 1995, he purchased Yukos, Russia’s largest oil company for a mere $309 million– today it is valued at $15 billion.

In 2003, he became a main target of the Kremlin’s anti-oligarch crackdown. After raiding his offices and arresting Khodorkovsky’s close business associate, investigators went after several other people and companies affiliated with Khodorkovsky for fraud, tax evasion and even murder.

In October 2003 Khodorkovsky was seized at gunpoint by Russian federal agents on charges of fraud and tax evasion.

Estimated Worth:

$8 billion

Current Position:

Founder, Menatep Group

Major Holdings:


Other Interests:

Bank Menatep, Trust Investment Bank and Menatep International Financial Alliance; investment firms Global Asset Management, the Blackstone Group, the Carlyle Group and AIG Capital Partners; information technology company Sibintek; telecom operators MKS, Macomnet, Metrocom, Rascom and Magistral Telecom; and, through his Open Russia Foundation, several Russian news publications

Political Connections:

Khodorkovsky cultivated relationships with government officials through his bank, Menatep, which served the accounts of many state enterprises and regional governments. Three years before his acquisition of oil company Yukos, Khodorkovsky was appointed to the Ministry of Fuel and Energy.

In 1996, he was among the Big Seven, Russia’s most influential bankers who backed the reelection of President Boris Yeltsin. Khodorkovsky’s longtime partner, Leonid Nevzlin, is a senator in the Federation Council (the upper chamber of the Russian parliament; seats in the Federation Council are appointed). Despite an informal pact Russian oligarchs made with Putin in 2000 that they would stay out of politics, Khodorkovsky has become increasingly involved in the Kremlin’s affairs. He has financed two liberal opposition parties, Yabloko and the Union of Right Forces, upsetting Putin’s dominance in the Russian parliament….


Khodorkovsky lives with his wife and four children in Moscow. He frequently travels to the United States. He reportedly dined with Condoleezza Rice last year and recently was a guest at Herb Allen’s Idaho ranch, along with Bill Gates, Warren Buffett and other luminaries, for an annual telecommunications executives meeting.


After a series of dubious business practices, Khodorkovsy has struggled with a poor public image. In 1998, his bank Menatep collapsed, yet Khodorkovsky managed to protect himself, despite damage to his depositors and creditors. (The bank also defaulted on a $236 million loan from Western banks.)

In 1999, he moved the location of a Yukos shareholders meeting 160 miles from Moscow without advance notice to minority stockholders, keeping them from voting against the sale of Yuko’s assets to an offshore company. That same year, he prepared a large issue of new shares that diluted the stake of American investor Kenneth Dart, who claimed Khodorkovsky defrauded him of millions of dollars. Recently, however, Khodorkovsky hired a Washington, D.C., public relations firm, and he is presenting himself as a crusader for stockholder and investor rights.

Khodorkovsky donated $1 million of Yukos profits to the U.S. Library of Congress, and he set up the Open Russian Foundation, with Henry Kissinger as a member of its board of trustees, to donate to museums, hospitals and universities. In 2001 and 2002, Khodorkovsky’s net worth increased fourfold.


September 12, 2003


A “round-trip of cash” disguised as “insurance” is too smooth
for the Securities and Exchange Commission.

By Stephen Taub,

The Securities and Exchange Commission has announced that American International Group Inc. agreed to pay $10 million to settle fraud charges related to its role in an accounting fraud at Brightpoint, a cell-phone distributor.

In addition, the SEC brought charges against four executives, including former Brightpoint chief financial officer Philip Bounsall….

In bringing the fraud charges against AIG, the SEC accused the company with developing and marketing a so-called “non-traditional” insurance product for the stated purpose of “income statement smoothing.”

Brightpoint used that product to hide $11.9 million in losses and to overstate earnings by 61 percent in 1998, said the commission, adding that the $10 million civil penalty reflects AIG’s participation in the Brightpoint fraud, as well as misconduct by AIG during the investigation.

“AIG worked hand in hand with Brightpoint personnel,” said Wayne M. Carlin, regional director of the commission’s Northeast Regional Office, “to custom-design a purported insurance policy that allowed Brightpoint to overstate it’s earnings by a staggering 61 percent.”

Added Carlin: “This transaction was simply a ‘round-trip’ of cash from Brightpoint to AIG and back to Brightpoint. By disguising the money as ‘insurance,’ AIG enabled Brightpoint to spread over several years a loss that should havbe been recognized immediately.”

AIG agreed to make it appear that Brightpoint was paying premiums in return for an assumption of risk by AIG, the SEC elaborated in its complaint. “In fact, Brightpoint was merely depositing cash with AIG that AIG refunded to Brightpoint,” it added.

In addition to Bounsall, the commission charged John Delaney, Brightpoint’s former chief accounting officer; Timothy Harcharik, Brightpoint’s former director of risk management *; and Louis Lucullo, an AIG assistant vice president.

It claimed that Delaney and Harcharik negotiated the arrangement with Lucullo, and Bounsall approved the insurance transaction without adequately reviewing it.

Without admitting or denying the charges, Brightpoint agreed to pay a $450,000 civil penalty, Bounsall agreed to pay a $45,000 civil penalty, and Delaney consented to the entry of a permanent injunction barring future securities law violations, a permanent bar against his serving as an officer and director of a public company, and a judgment ordering him to pay a $100,000 civil penalty….

~ ~ ~

* For a similar fraud scheme (but where the risk manager refused to “go along”), GO TO > > > RICO in Paradise

… and, for more AIG conspiracy spotted North of the Great Divide, GO TO > > > Deceive, Discredit and Terrorize


September 12, 2003


‘Insurance policy’ helped second company
falsify earnings report

Associated Press

WASHINGTON – American International Group, one of the biggest U.S. insurance companies, yesterday agreed to pay a $10 million fine to settle federal regulators’ allegations that it fraudulently helped another company falsify its earnings report and hide losses.

The insurer, known as AIG, also failed to provide documents subpoenaed during the government’s investigation of the alleged fraud involving financial reports by cellular-phone distributor Brightpoint Inc., the Securities and Exchange Commission said.

AIG, of New York, neither admitted nor denied the SEC’s allegations in its settlement, in which it also is forfeiting a $100,000 fee paid by Brightpoint.

The SEC also charged Brightpoint, a distributor of wireless phones for companies, including Nokia, Sony-Ericsson and Virgin, and three former Brightpoint executives and an assistant vice president of AIG. Brightpoint agreed to a $450,000 fine, and three of the individuals settled, agreeing to fines of as much as $100,000. Brightpoint and the three individuals neither admitted nor denied wrongdoing.

The SEC alleged that AIG issued a “non-traditional” insurance policy to Brightpoint to help the company hide $11.9 million in losses in 1998. The insurance policy was said to be for the company to smooth out volatility in earnings….

Last February, AIG announced that it was taking a $1.8 billion charge to cover unexpectedly costly insurance claims, blaming the move on soaring increases in jury verdicts and legal settlements. AIG is widely seen as an industry leader, often ahead of others in responding to changes in the insurance marketplace.

Brightpoint, of Plainfield, Ind., in late 2001 restated its earnings for the previous 3 ½ years. That led to shareholder lawsuits against the company.

Jerre Stead, lead independent director of Brightpoint, said the settlement will enable Brightpoint’s management “to focus on the company’s core business, and represents the final step in resolving all stockholder and regulatory matters relating to the 1998 purchase of the purported insurance policy.”

Shares of AIG were down 43 cents to close at $60.15 on the New York Stock Exchange.


October 7, 2002



By John A. Byrne, BusinessWeek

By almost any measure, the board of insurance giant American International Group Inc. is a throwback. With 20 members, it seems too large to encourage meaningful discussion. With nine AIG execs holding seats, it includes far too many insiders. It even lacks a single currently active executive among its independent directors. Until only recently, the board also failed to have a separate nominating committee to ensure that its outside directors are truly independent.

Perhaps more troubling, seven of the inside directors, including Chairman and CEO Maurice R. “Hank” Greenberg, control and run two private companies that have substantial business dealings with AIG, leaving the execs open to charges of self-dealing and conflicts of interest.

One of these companies is a veritable bank vault, paying out tens of millions in cash and stock to AIG executives outside the purview of the board’s compensation committee.

No wonder many governance experts consider the board among the weakest in Corporate America.

But don’t tell Greenberg that. “Calling us one of the worst boards in America would be an atrocious distortion of fact,” he says, pointing to the superior results the insurer has posted since he took it public 33 years ago as evidence that the unusual governance structure he set up then works.

There’s no doubt that Greenberg has delivered outstanding results. He built AIG into a global powerhouse, the most successful company in the world. Under his leadership, the insurer’s market value has ballooned to more than $140 billion, up from just $452 million in 1969, when he took AIG public. Net income soared to $5.4 billion last year. . . . In the past five years, it has handily outperformed its peers, and the Standard & Poor’s 500-stock index.

Most shareholders aren’t overly concerned about AIG’s governance. “There’s not a lot that I can complain about based on what this company has delivered,” says Kevin W. Callahan of Boston-based Century funds, which owns more than 450,000 AIG shares. “This is a strong, well-managed company.”

Is AIG a special case? Or is Greenberg clinging to a governance model more appropriate to a private partnership that does not avail itself of the public capital markets?

At least by the standards of governance experts, AIG’s unique structure doesn’t stand up. Some critics say the strong-willed Greenberg is out of touch, resisting the expectations that shareholders now place on public corporations. Until two years ago, insiders made up the majority of the board. When Greenberg served on the New York Stock Exchange’s governance committee earlier this year, he was in the losing minority in arguing that a board should not be required to have a separate nominating panel….

Greenberg argues that the large number of inside directors, who together own 25% of AIG’s outstanding stock, allows for more meaningful discussion. “Their interests are directly aligned with those of the shareholders,” he says….

As for the outside directors, who are mostly retired, Greenberg insists they have more time to devote to their board duties than fully employed execs. And he defends their credentials.

“How many people can I get who understand trade issues with Japan and China as well as [former U.S. Trade Representative] Carla Hills?” he asks.

“Who knows more about infrastructure funds around the world than Barber Conable, who ran the World Bank? Christ, this is a good board.”…

But governance critics note that a separate compensation scheme controlled by Greenberg and a handful of insiders can have a perverse effect. “Since the top officers control it, the compensation program could stifle any dissent that could legitimately come before the board, says Delaware’s Elson.

“It creates a company within a company that is at odds with the transparency we expect from a public corporation.”

Yet another private outfit, C.V. Starr & Co., has a small collection of insurance agencies that were losing money when Greenberg took AIG public. He says he didn’t want to saddle AIG’s new investors with the business. So he and the same group of insiders kept ownership of the now-profitable agencies.

If they had included this business in the original AIG public offering, however, AIG’s shareholders may have realized benefits from that turnaround. Last year, AIG paid $77 million in commissions to this private entity, run and controlled by Greenberg and other AIG insiders.

Isn’t that a blatant conflict of interest?

Not at all, argues the CEO. Greenberg maintains the transactions are at arm’s length and often are less advantageous to the Starr agencies. “We try to bend over backward to be even more evenhanded,” he claims.

“AIG gets hundreds of millions of dollars in premiums that way. Where’s the conflict?”…

. . . Continued at C.V. Starr and Starr International


August 14, 2002

Putnam may suffer as
Conseco’s troubles mount

By Svea Herbst-Bayliss

BOSTON, Aug 14 (Reuters) – Mutual fund firm Putnam Investments, already facing declines in money management fees, may suffer another blow this quarter as a stake in insurer Conseco Inc is likely to shave millions off its pre-tax income.

In a regulatory filing, Putnam’s parent, No.1 insurance broker Marsh & McLennan Co., said owning a stake in the ailing Carmel, Indiana-based insurer and financial company could cost the Boston-based money manager up to $15 million….

Conseco last week missed a bond interest payment and said it plans to extend three more bond interest payments due later this month as it begins work on restructuring its huge debts.

Putnam is entangled in the Conseco saga because it owns an equity interest in Boston-based buyout firm Thomas H. Lee Partners, L.P. whose Thomas H. Lee Equity Fund IV L.P. owns a chunk of Conseco’s public stock.

“The significant capital restructuring that may result from the actions announced by Conseco may adversely impact the value of Fund IV’s investment in Conseco, and consequently the value of Putnam’s investments related to Fund IV,” Marsh said in the filing….

The news comes at a critical time for Putnam as America’s fourth-biggest fund firm’s portfolios take a battering in the stock market’s relentless declines.

The firm drew heavy criticism for its decision to stop naming individual fund managers of its funds, a step that some firms had hoped would keep them out of the limelight when managers quit or are fired.

Amid investor complaints, Putnam quietly reversed itself and went back to naming fund managers earlier this summer.

Putnam’s woes have already hampered Marsh & McLennan’s earnings in the second quarter when money management fees fell even though insurance-related revenues offset the drop….

In the second quarter, investment management revenue at Putnam fell to $581 million from $696 million a year ago while average assets under management, used to calculate fees for managing money, slumped 11 percent to $301 million.

Putnam’s growth funds, once a main money maker, have been a particular trouble spot as assets under management there tumbled to $39 billion from $76 billion over the year. Putnam has also laid off scores of employees to help trim costs.

Conseco’s troubles have also deepened in the last weeks and on Monday the New York Stock Exchange moved to kick it off the exchange after it suspended trading its stock which was last quoted at 34 cents a share. REUTERS

For more, GO TO > > > Marsh & McLennan’s Putnam Investments

* * *

September 11, 2001 <<< (Note the date!)

Conseco Sues Six D&O Insurers Over Litigation Coverage

Conseco Inc. is suing six of its own insurers, claiming they are attempting to dodge legitimate potential claims on directors and officers policies bought by the Indianapolis-based insurer.

In its annual 10-Q filing with the U.S. Securities and Exchange Commission, Conseco said it “maintained certain directors’ and officers’ liability insurance that was in force at the time the Indiana securities and derivative litigation was commenced and, in our view, applies to the claims asserted in that litigation,” according to BestWire.

The Indiana litigation involves 45 lawsuits filed against Conseco in U.S. District Court for the Southern District of Indiana. Conseco said 19 of those cases were putative class actions on behalf of people or entities that purchased the company’s common stock during alleged class periods that generally run from April 1999 through April 2000.

In those cases, plaintiffs allege that the company and individual directors and officers violated federal securities laws by, among other things, making false and misleading statements about the then-current state and future prospects of Conseco Finance – particularly with respect to performance of certain loan portfolios of Conseco Finance – which allegedly rendered the company’s financial statements false and misleading.

Because it had directors and officers coverage, Conseco didn’t establish any reserves for possible losses with respect to those claims, the company said in its 10-Q. “The insurers have denied coverage for those claims, so we commenced a lawsuit against them on June 13, 2001, in Marion County Circuit Court in Indianapolis,” Conseco said.

Named as defendants are National Union Fire Insurance Company of Pittsburgh, a subsidiary of American International Group Inc., Royal Insurance Company of America, a unit of Royal & Sun Alliance; Westchester Fire Insurance Co., a unit of Ace Ltd.; RLI Insurance; Greenwich Insurance Co., a unit of XL Capital Ltd., and HSBC Insurance Brokers Ltd.

Morgan Stanley analyst Alice Schroeder, in an Aug. 31 property/casualty insurance briefing, wrote that she doesn’t believe an unfavorable outcome for the defendants would have a material impact on the earnings of AIG, XL or Ace.

Schroeder said in her report that AIG’s National Union Fire “was apparently the primary carrier issuing the policy, which carries limits of $10 million.”

“With jury awards rising at a rapid pace, insurers are getting tougher to protect against larger losses–whether they succeed remains to be seen,” Schroeder said in her report. “This event also confirms our view that the D&O market remains difficult, and prices must continue to rise.”…

See also: Putnam Investments

For much more on Conseco, GO TO >>> Birds in the Trailer Park


September 19, 2001

AIG Chairman Makes Plea

The Honolulu Advertiser

American International Group Inc. chief executive Maurice “Hank” Greenberg wants the government to help hold down damage claims from the World Trade Center attack, according to a report by Morgan Stanley Dean Witter & Co. analyst Alice Schroeder.

AIG, the biggest insurer, has said its claims from last week’s attack would be about $500 million, and Schroeder said the cost may reach $800 million.

Greenberg, 76, who has run AIG since 1967, hopes to forestall litigation from the attack that destroyed the World Trade Center, which may increase insurers’ costs and delay paying claims, Schroeder’s report says.


February 28, 2003


From The Wilderness

In late November of 2002, Congress also passed a Terrorism Insurance Bill. It became a law that, in the event of a major terrorist attack, insurance companies will not have to bear the burden.

The U.S. taxpayer will.

And these megalithic giants like AIG will have to sustain only five million dollars in losses before the Treasury steps in to carry up to 90% of the remaining burden up to $100 billion. Five million dollars is a drop in the bucket for a company like AIG (the world’s largest insurance company), which had more than $5 billion in profits in 2001.

From what we have seen above, that money will have to come out of Social Security, Medicare, Medicaid, your pension or the money that should have gone to pave the roads in your neighborhood….


February 4, 2003

Stocks Slammed by AIG Woes, War Jitters

 By Elizabeth Lazarowitz, Reuters

NEW YORK – Stocks slumped on Tuesday after American International Group Inc. (NYSE:AIG), the world’s largest insurer, warned it had greatly underestimated its liabilities, further unnerving investors on edge ahead of a diplomatic meeting that could heighten the threat of war with Iraq.

War jitters sent the price of gold to a 6-year high, drove the dollar lower and pumped up oil prices a day before Secretary of State Colin Powell is scheduled to provide the U.N. Security Council with evidence Washington says will show that Iraq is hiding banned weapons from U.N. arms inspectors.

“Apprehension is growing about the uncertainties of what may occur in the Middle East,” said A.C. Moore, chief investment strategist at Dunvegan Associates.

“It’s to be expected to see this type of volatility and softness until, perhaps, a successful outcome is obtained.”

Worries about the foggy corporate profit outlook were reignited after AIG announced a massive charge of $1.8 billion to cover liability claims that have built up in recent years. AIG sank more than 6 percent and pulled other insurers down.

“AIG is more than a bellwether. It’s a reflection of where the global economy is, and for them to say they have balance sheet problems, it calls into question valuations everywhere,” said John Gillette, ADR trader at investment firm Lazard Freres.

* * *

February 4, 2003

AIG stock falls 10 pct after
$1.8 billion charge

By Bill Rigby, Reuters

NEW YORK, Feb 4 (Reuters) – American International Group Inc. (AIG) sent shock waves across the world insurance industry on Tuesday, as it admitted it had drastically underestimated U.S. liability claims on its books.

AIG, the world’s largest insurer, is to take a $1.8 billion charge to pay for heavier-than-expected workers compensation and executives’ liability claims, which have built up over the past few years.

It blamed U.S. courts handing over large awards and a spike in shareholder lawsuits from corporate scandals such as Enron Corp. and WorldCom Inc. AIG Chief Executive Maurice Greenberg suggested other insurers were suffering from the same problems.

The hit on an insurer known for high premiums and keeping a tight rein on claims surprised investors.

AIG’s shares fell as much as 10 percent in early trading, recovering slightly in the afternoon. Shares of rivals ACE Ltd. (ACE), Travelers Property Casualty Corp. (TAPa) and Chubb Corp. (CB) — which also announced a small reserve addition on Tuesday — all fell sharply.

“We believed that the reserve cushion AIG had built up in the 1990s would allow the company to avoid a big, one-time charge,” said Merrill Lynch analyst Jay Cohen. “Clearly, the dramatic liability trends overwhelmed AIG’s ability to manage this issue over time.”

AIG’s Greenberg, the world’s leading voice on insurance issues, blamed an unpredictable surge in claims for the hole in its reserves.

“It’s very difficult in some of these (liability) classes of business to predict the price you are charging one day and whether that is going to be adequate in a couple of years,” he told an analyst conference call.

“It was very hard to predict it would explode the way it did,” he said, citing the corporate scandals that led to shareholder lawsuits and payouts on directors’ and officers’ liability policies, known as D&O policies, which pay executives’ legal expenses and settlements when a company is sued.

Suits against executives have soared in the past few years as bitter shareholders look to claw back money they lost on crumbling stocks.

Greenberg suggested other insurers will have to grapple with the same issues. “The things that we’ve done certainly affect everyone,” he said, raising the specter of large reserve charges by other insurers.

European insurers and reinsurers with exposure to U.S. risks also fell hard, with Germany’s Munich Re and Allianz AG and Switzerland’s Zurich Financial Services all falling more than 5 percent.

AIG’s stock closed down fell $3.63, or 6.5 percent, at $51.70 on the New York Stock Exchange, where it was the most heavily traded stock, with almost 19 million shares changing hands. The shares are down more than 51 percent from all-time highs around $103 at the end of 2000.

© 2003 Reuters

See also: John A. Graff


February 7, 2003

AIG shares hit 4-yr low,
billions lopped off value

NEW YORK, Feb 7 (Reuters) – Shares of American International Group Inc.(AIG) fell to a four-year low on Friday, deepening a long-term slump for the world’s largest insurer, which has seen $150 billion lopped off its market value in just over two years.

AIG shares, still reeling from the company’s Monday disclosure that it drastically underestimated old liability claims, dipped as low as $46.50 on the New York Stock Exchange, a level not seen since December 1998.

The stock is down 16 percent since Monday night, when it made a surprise announcement that it would take a $1.8 billion charge to add to its liability claims reserves. That plunge has chopped about $23 billion off its market value.

AIG is now worth about $122 billion on the stock market, less than half its valuation in late 2000, when it peaked over $270 billion. That briefly made AIGthe largest U.S. financial services firm, ahead of Citigroup Inc. (C), which is now worth about $165 billion.

AIG’s shares have sunk as investors worried about insurance prices and AIG’s future after Maurice Greenberg, its 77-year-old chief executive, who has dominated the company — and the insurance industry — for years.

AIG shares closed at $46.70, down $1.50, on the New York Stock Exchange. REUTERS

© 2003 Reuters


September 13, 2002


From Financial E-News ( )

 Wal-Mart has sued AIG and Hartford to get back $150 million it says it lost through corporate owned life insurance (COLI) policies for employees.

Wal-Mart charges that the insurers did not warn them sufficiently of the risks of the plans, and the effects of new tax laws.

Since more than half of Fortune 500 firms have COLI plans, this could open the door to a flood of lawsuits against other life insurers…oh joy!

* * *

February 7, 2002

Enron losses catch up with
insurers, sting profits

By Bill Rigby

NEW YORK, Feb 7 (Reuters) – As the Enron saga unfolded in front on Congress, the trail of devastation left by the bankrupt energy trader caught up with insurers, wiping millions off quarterly profits.

American International Group Inc. (AIG) and Chubb Corp. (CB) both took a hit on Thursday, adding to the pain of a year already clouded by the destruction of the World Trade Center.

The insurers got hurt by Enron in two ways: underwriting surety bonds, which guaranteed Enron Corp.’s promises to deliver gas; and losses on investments in the Houston company.

The insurers won’t be the last this season to get hit. Life insurer MetLife Inc. (MET) held $63 million in Enron investments, according to analysts, which it may have to write down when it reports earnings next week. CNA Financial (CNA), also reporting next week, has already said it faces $50 million in surety losses.

Further losses may also be lurking in the form of directors’ and officers’ liabilities — designed to protect bosses from lawsuits — but insurers may seek to cancel Enron’s policies if they can show directors meant to mislead investors.

Warren, New Jersey-based Chubb took the biggest hit on Thursday, setting up a$220 million reserve fund to cover surety losses, putting a large dent in reported profits.

Chubb, like other property and liability insurers in the 1990s, turned to surety bonds as a good way of making money as rates declined in their main lines of business.

The practice turned out to be quite risky, however, as sureties were used to guarantee a range of complex financial deals, not just the traditional construction projects or straightforward deliveries.

Chubb has so far only actually paid out a small fraction of its $220 million reserve, and may not end up paying it all, as the firm — along with a group of other insurers — is battling> J.P. Morgan & Co. (JPM) to avoid payment on one deal, which the insurers say was misrepresented.

The matter is likely to take months — if not years — to settle, as broader investigations into Enron proceed.

Including the Enron hit, Chubb’s quarterly net profits fell 83 percent, to $28.7 million.

New York-based AIG, the world’s No. 1 insurer by market value, said it paid out $57 million in Enron surety bond claims, and also wrote down $69 million worth of Enron investments in the quarter.

Despite that, the giant insurer, known for delivering reliable profits from its global operations, reported net profits increased 3.5 percent, to $1.87 billion.

AIG and Chubb are the latest in a line of insurers to take a hit from Enron.

Over the past week, several other insurers faced up to Enron-related losses putting a dent in earnings, including John Hancock Financial Services Inc. (JHF), Phoenix Cos. Inc. (PNX), and W.R. Berkley Corp. (BER).

© 2002 Reuters

For more on the AIG-Chubb connection, GO TO > > > Allied World Assurance

For more on the Enron connection, GO TO > > > The Story of Enron


February 20, 2002


Associated Press

PITTSBURGH – PNC Financial Services Inc. revised its 2001 earnings downward yesterday for the second time in three weeks, saying a $35 million bookkeeping error went undetected for much of last year.

At the end of January, PNC lowered its net income for the year by $155 million, or 53 cents a share, when regulators disagreed with the way in which the company handled the bookkeeping of $550 million in corporate loans.

Yesterday, PNC said it would further reduce its year-end earnings by $35 million – from $412 million, or $1.38 a share, to $377 million, or $1.26 a share – because of overstated earnings from its residential mortgage banking business, which was sold to Washington Mutual Inc.

PNC spokesman R. Jeep Bryant said the error dates to the first quarter of last year and was carried through on the company’s books until it was discovered as part of PNC’s year-end review.

The Pittsburg-based company … announced in October 2000 that it planned to sell the residential mortgage banking business to Washington Mutual for $605 million, subject to closing adjustments. The sale was completed in January of this year, Bryant said.

An investor filed suit against PNC and its auditor, Ernst & Young, earlier this month, accusing them of misrepresenting 2001 earnings.

Last year, PNC established three subsidiaries with American International Group Inc. and assigned the corporate loans to those companies. Federal regulators, saying the way PNC moved the loans off its books violated generally accepted practices, forced the company to return the loans to its balance sheet, along with their depreciation….

PNC has hired the accounting firm of Deloitte & Touche to audit it financial statements this year and review PNC’s internal controls over the accounting and reporting process….

For more on Ernst & Young and Deloitte & Touche, GO TO > > > P-s-s-t, wanna buy a good audit?


September 16, 2002

Asbestos Lawsuit Stays On Docket

CBS News

WASHINGTON – The Supreme Court refused Monday to block a massive asbestos trial in West Virginia.

Chief Justice William H. Rehnquist did not comment in turning down requests from Mobil Corp. and other large companies that stand to lose millions if found liable in the trial scheduled for Sept. 23 in a West Virginia court.

The trial will combine the cases of some 8,000 people who claim asbestos exposure against 250 companies. The companies are employers, building owners, manufacturers and others.

Over the summer, two companies asked the Supreme Court to consider whether the trial would be unconstitutional. The court has not acted on that appeal. The companies returned to the high court this month to request an emergency delay in the trial, arguing that the issue cannot wait until early October, when the court’s term begins.

Corporations, fearing costly jury verdicts, could be forced to settle out of court, attorney Walter Dellinger said in the filing for Mobil Corp. and Honeywell International.

“If this patently unconstitutional trial plan succeeds in coercing mass settlements of merit-less claims, then the result will be more merit-less claims and more unconstitutional trial plans,” Dellinger wrote.

“Clearly the total liability for all the plaintiffs would be enormous, potentially in the hundreds of millions of dollars,” said Mark Behrens, an attorney for a group of insurers who filed a friend-of-the-court brief in the case.

Asbestos was widely used for fireproofing and insulation until the 1970s, when its use was curtailed after scientists concluded that inhaled asbestos fibers could be linked to lung cancer and other diseases.

But asbestos-related illnesses can take years to materialize. With lawsuits spiking in the last three years, some 50 or so U.S. corporations are already in bankruptcy because of asbestos liabilities.

Many of the companies being sued now did not manufacture asbetos, but sold products containing it — such as brake linings in cars.

U.S. insurers have already paid $22 billion in asbestos claims. But actuarial firm Tillinghast-Towers Perrin has estimated that U.S. corporations will eventually have to pay out $200 billion if current trends continue.

Nationwide, there are some 200,000 pending asbestos claims.

The West Virginia Supreme Court has endorsed trial consolidations to resolve large numbers of asbestos suits in that state.

The case is Mobil Corp. v. Adkins, 02-132.

© MMII, CBS Worldwide Inc. All Rights Reserved.


February 28, 2002


The West Virginia Insuror

Shares of American International Group Inc., the world’s No. 1 insurer by market value, recently dropped more than 3 percent as unsettling reports about the company spooked investors. AIG shares were off $2.52, or 3.42 percent, at $71.20 in midday trading on the New York Stock Exchange….

The stock was hit by concerns about a subpoena AIG received related to a probe into a bank it helped structure financial deals for; lingering doubts over who will take over from Chairman Maurice Greenberg; and comments from a top AIG executive predicting large liability losses in the insurance industry from a rash of shareholder lawsuits.

AIG has gotten a subpoena from the Securities and Exchange Commission investigation in relation to an investigation into the bookkeeping of PNC Financial Services Group Inc., a company spokesman said. He declined to go into further detail. AIG helped PNC set up three companies used for structured finance deals. Regulators have forced PNC to consolidate the companies in an accounting change that cut PNC’s 2001 net income by 53 cents a share. AIG has said the move will not affect its income or balance sheet, and that it is not involved with any other transactions of that type.

Greenberg’s replacement as the conference keynote speaker was AIG’s senior vice chairman, Thomas Tizzio. He warned of possible industry losses stemming from a rising number of shareholder lawsuits, which are covered by certain insurance policies.

Shareholder lawsuits — which have risen because of an increasing number of corporate bankruptcies and accounting investigations — trigger “director and officer” (D&O) insurance policies. These policies can cover everything from the cost of legal fees to any compensation awarded to shareholders.

“As we turn to the recent events in corporate America, whether they have to do with the collapse of Enron or the bankruptcy of Kmart, corporate governance and the responsibility of directors and officers is at center of the story right now,” Tizzio said.

“Congress wants to know how it happened, who is to blame. The country wants to know who is to blame as well,” he said.

“At the end of the day, who is going to pay for all these investigations, litigations, settlements and awards?” Tizzio asked.

“As an industry, underwriters and brokers must immediately address how to handle what ultimately could become one of the most catastrophic years for the D&O sector.”


March 17, 1997


The Washington Weekly

The link between the Arkansas Development Finance Authority (ADFA) and AIG goes beyond $5 million. An AIG affiliate has managed over one billion dollars worth of ADFA’s bonds, according to the Arkansas Democrat Gazette. An allegation that ADFA launders money for U.S. intelligence has repeatedly surfaced but without any direct documentary evidence to date….

Apart from ADFA, where does AIG get its money to fund, among other things, lobbying on behalf of the Chinese government? The answer is not clear, though some indications are available:

(1) In 1995, AIG became the first company to be licensed to sell insurance in China.

(2) AIG is a client of Kissinger & Associates.

It was Henry Kissinger, the former Secretary of State, who advised against harsh sanctions after the Tienanmen Square massacre. . . .

(3) AIG has also been the focus of SEC and BCCI investigator, Manhattan DA Robert Morgenthau’s attention . . . to explore its ties to the BCCI.

(4) And finally, AIG is headed by Maurice Greenberg, one-time chairman of theNY Federal Reserve Bank, and in 1995 a candidate to head the CIA.

Greenberg is chairman of the US-China Business Council and lobbied hard (and successfully) for the Clinton administration to sever the link between China’s human rights record and renewal of China’s Most-Favored-Nation trade status.

Whatever AIG is, it appears to be tied into that big, bipartisan, ugly network of intelligence, money laundering, Arkansas, and Communist China.


From The Conspirators: Secrets of an Iran-Contra Insider, by Al Martin:


During the Iran-Contra years, principally 1983-86, there was a State-sponsored pattern of fraud undertaken by members of the Bush family and members of the Reagan regime, and powerful Republicans in the shadows of Washington….

George, Jr.’s specialty was insurance fraud.

We all have our specialties. Jeb is sort of a mixed … specialist, that is, Jeb likes any kind of fraud – banking, securities, real estate, oil and gas, gold bullion, aircraft brokerage….

Neil was much more in the real estate end of the fraud. But George, Jr. – I would classify as an insurance fraudster, in terms of his Iran-Contra profiteering.

By that I mean that he profited quite handsomely from all those bogus claims in that scheme that was originally developed by Jack Singlaub for the so-called missing aircraft and luxury yacht scam.

Singlaub started it under the auspices of the World Anti-Communist League, Inc., which … had its corporate headquarters in Phoenix, in the offices next to J. Walter Bush Securities in the Lincoln Savings and Loan Plaza.

We’ve described this fraud before, how it worked. … Frankly, I know AIG claims about $15 million, but I think it’s a little more, either $18 or maybe $20 million….

Republican-friendly corporations can’t simply give money for an illegal covert purpose of State. However, they can funnel money in other ways.

How does an insurance company do it? By paying off fraudulent claims of property that is claimed to stolen, which in fact has not been stolen.

It’s simply been moved to somewhere else….

I do have extensive documentation about it, mainly because I had marketed part of this so-called tax shelter for Mitch Marr.

Mitch was the national chairman for brokerage activities of the World Anti-Communist League, and Mitch used to come to Miami and Fort Lauderdale all the time trying to drum up people who were willing, sympathetic Republicans, who were willing to donate expensive, private aircraft and expensive yachts and get ten time what these things were worth as tax deductions.

And then, of course, the boats wound up in North Andros Island in a little facility there with the names changed and the numbers changed. And the planes wound up at hangars from Boca Raton to Joplin, Missouri with changed numbers and such.

But that deal … was a fraud envisioned to raise $20 million or so, which is about what it did. The principal insurer who took it on the chops, of course, was AIG.

In some cases, insurance policies had to be switched to AIG. American Insurance Group (AIG) was the largest in the country then, and American Reassurance, more commonly know as American Re and their subsidiary General Re, were all controlled by very sympathetic Republicans….



From Insurance Journal, by Charles E. Boyle

The Emperors of the Chou Dynasty, who began the construction of the Great Wall of China in the 4th century B.C., intended it to keep out the barbarian hordes that periodically invaded the Middle Kingdom. After 1,800 years, the Wall extended over 1,500 miles but was never entirely successful. Walls, however, have two sides, and the barrier affected the development of Chinese civilization by both physically and mentally restricting access to other cultures beyond the wall.

China’s real GDP has grown more than 5 percent every year since 1979. It topped $1 trillion in 1999, and is on track to grow another 8 percent this year. Most of that growth has been export-driven. At the end of the third quarter, China’s exports had risen more than 32 percent for the year to $205 billion, and its overall trade surplus is expected to top $25 billion.

China has gained a place in world trade, and its leaders have for the last 10 years sought entry into the World Trade Organization. Membership would insulate China’s exports from protective trade barriers, open new markets for expansion and facilitate the importation of needed technology.

The WTO, however, is based on free trade principles, and, as a member, China will be required to open its economy to competition and to abide by WTO rules. Can its leaders force through the necessary reforms, and see them observed, given China’s bloated, inefficient, state-run economy and the corruption of many officials? The answers should begin to emerge, as it appears almost certain that China will join the WTO in 2001.

Two major barriers fell this year.

The U.S. concluded and ratified a treaty providing for “Permanent Normal Trade Relations”, a milestone in U.S./China relations. It did more than eliminate the annual debate over China’s “most favored nation” status.

The European Community then negotiated its own bilateral trade agreement withChina. Both pacts provide essentially the same benefits and obligations, but the EU gained some additional concessions, notably the acceptance of agents and brokers as part of the insurance accords.

These agreements were essential before WTO membership could be approved, and most of their provisions are contingent upon China’s joining. They cover the rights of western companies to enter previously protected markets, mainly telecommunications, agriculture and financial services.

European and U.S. insurance companies enthusiastically supported the trade agreements.

AIG CEO Maurice Greenberg said, “The best way to promote positive change in China is to trade with China.”

Both PNTR and the EU deal provide for more licenses to foreign insurers, and a loosening of the stringent restrictions on where they can operate. Other than Hong Kong, foreign insurers are mostly confined to the Shanghai and Guangzhou regions. Eventually they hope to gain increased market share, and the opportunity to offer their products to 1.3 billion Chinese consumers.

So far, however, China hasn’t been exactly generous in granting new licenses. AIG and Aetna already had them; Chubb and John Hancock were accepted in April. European insurers AXA, Allianz, Royal & Sun, CGNU and Winterthur were also approved before the accords were signed. Afterwards, only Generali and ING Group have received licenses, although Gerling, Skandia and Transamerica/ Aegon have applications pending.

U.S. Commerce Secretary Norman Mineta recently complained that no U.S. insurers have so far received new permits. It appeared the Chinese were going ahead with their pledge to grant seven new licenses to the Europeans, Mineta indicated, but were holding back on their promise for an equal number to U.S. insurers.

They may even be planning to cut the number to just four, he added. New York Life, Met Life, Cigna and others are still waiting….

* * *



As of June 30, 2001, the #1 institutional holder was Britain’s Barclays Global Investors, with $6.75 BILLION held.

Then follows, in order: Fidelity Mgmt & Research; Alliance Capital; State Street Global Advisors; Morgan (JP) Fleming; Vanguard Group; Smith Barney; American Century; AIM Mgmt; Capital Research; Deutsche Bankers Trust; Teachers Insurance & Annuity; Northern Trust; Goldman Sachs with $1.72 BILLION; and Putnam (Marsh & McLennan) with $1.7 BILLION.

* * *

From the Wilderness


by Michael C. Ruppert, From The Wilderness

[EDITORIAL NOTE – From The Wilderness is a sole proprietorship and dba. It is written and edited by one person; Me. I do almost all of the research. Therefore, in the following story, for both legal reasons and for better reading I have decided to use the personal pronouns “I” and “me” instead of standard editorial references in the third person.]


This series is dedicated to Mark Swaney of the Ozark Gazette for his intellectual courage and tenacity; to John McGlaughlin, the straightest and toughest man who ever honestly carried a badge; to Celerino Castillo III, with a heart bigger than his beloved Texas; to all the young men and women, mostly minorities, who are serving up to life in prison for crimes that don’t remotely compare to those of Carlos Lehder; and to all the innocents in Colombia who stand at the brink of the next Vietnam War.


There are mounting holes in the story of a woman, Coral Talavera Baca (henceforth referred to by her maiden name Talavera), who has claimed to be the wife of Medellin Cartel co-founder, Carlos Lehder, deepening the mystery about relationships between her, Lehder himself, the insurance giant American International Group (AIG), and the Central Intelligence Agency.

These new discrepancies, including her prior confirmation of the authenticity of documents now suspected of being forged, have raised the possibility that the U.S. Government, in partnership with AIG, has been deliberately planting false information in the press to support the woman’s claims about Lehder’s reported freedom and activities. Talavera has been simultaneously described as either Staff Counsel for AIG’s in house San Francisco law firm or as its office manager.

In Part I of this series we reported that other journalists, who have asked not to be identified, had received the same documents we continue to examine here. Some of those documents purport to be official reports from the U.S. Treasury and U.S. Attorney’s offices.

As FTW moves deeper into its multi-part investigation – inspired by revelations of possible 1987-92 drug money laundering involving AIG, Goldman Sachs and the Arkansas Development Financial Authority (ADFA) – attention now focuses on Talavera’s employer, AIG.

These events increased my interest in the 1987 founding of Coral Reinsurance (Coral Re) by AIG, Goldman Sachs (whose then Vice Chairman Robert Rubin served as Treasury Secretary in the Clinton Administration) and ADFA.

Lehder, arrested in 1987, was allowed to keep almost $3 billion in assets in a move severely criticized by Merkle.

Where did that money go? Was it hidden it in a major insurance company with cash flows large enough to conceal it? This question, more than any other, except establishing Lehder’s current status, prompted me to begin this investigation….

FTW has also conducted an extensive investigation into AIG and its predecessors, including the C. V. Starr Insurance Companies, revealing deep connections to US intelligence dating back to the Office of Strategic Services (OSS) in World War II.

These connections include documented CIA operatives connected to drug smuggling from Southeast Asia and a current board member, Frank Wisner, Jr., whose father was a key figure in the creation of the CIA. History, as well as AIG’s current operations, suggest that these relationships continue unabated today….

Deconstructing AIG

The seemingly mundane insurance business is, in fact, one of the primary weapons of intelligence gathering around the world. And the founder of AIG, Cornelius Starr, was an architect of its use in World War II.

Consider these quotes from a September 22, 2000 story by Los Angeles Timesreporter Mark Fritz entitled, “The Secret (Insurance) Agent Men.”

“COLLEGE PARK, Md.——They knew which factories to burn, which bridges to blow up, which cargo ships could be sunk in good conscience. They had pothole counts for roads used for invasion and head counts for city blocks marked for incineration.

They weren’t just secret agents. They were secret insurance agents. These undercover underwriters gave their World War II spymasters access to a global industry that both bankrolled and, ultimately, helped bring down Adolf Hitler’s Third Reich.

Newly declassified U.S. intelligence files tell the remarkable story of the ultra-secret Insurance Intelligence Unit, a component of the Office of Strategic Services, a forerunner of the CIA, and its elite counterintelligence branch X-2.

Though rarely numbering more than a half dozen agents, the unit gathered intelligence on the enemy’’s insurance industry, Nazi insurance titans and suspected collaborators in the insurance business. But, more significantly, the unit mined standard insurance records for blueprints of bomb plants, timetables of tide changes and thousands of other details about targets, from a brewery in Bangkok to a candy company in Bergedorf.

‘They used insurance information as a weapon of war,’ said Greg Bradsher, a historian and National Archives expert on the declassified records. That insurance information was critical to Allied strategists, who were seeking to cripple the enemy’’s industrial base and batter morale by burning cities…

Germany had 45% of the worldwide wholesale insurance industry before the war began and managed to actually expand its business as it conquered continental Europe. As wholesalers, or ‘reinsurers,’ these companies covered other insurers against a catastrophic loss that could wipe out a single company. In the process, the wholesaler learned everything about the lives and property they werereinsuring [emphasis, mine]…

The men behind the insurance unit were OSS head William “Wild Bill” Donovan and California-born insurance magnate Cornelius V. Starr.

Starr had started out selling insurance to Chinese in Shanghai in 1919 and, over the next 50 years, would build what is now American International Group, one of the biggest insurance companies in the world. He was forced to move his operation to New York in 1939, when Japan invaded China.

In the early years of the war, the German insurance industry expanded its business as it conquered continental Europe. Nazi insurance brokers who traveled with combat troops during invasions also scoured local insurance files for strategic data…”

On the special value of reinsurance as a vehicle for intelligence gathering Fritz wrote:

Such convoluted business dealings were traced largely through the work of Ernest Stiefel, a member of the intelligence unit who diagramed the way insurance companies pooled their risks, invested in and insured each other and, as a result, willfully or witlessly shared data about nations at war. “Stiefel mapped the entire system,” said [Timothy] Naftali, a historian at the University of Virginia’s Miller Center of Public Affairs.

“Each time I take a piece of your risk, you’ve got to give me information. I am not going to reinsure your company unless you give me all the documents. That’s great intelligence information…”

Later in the story Fritz confirmed the value of reinsurance as a vehicle for money laundering:

“With the Axis defeat imminent, U.S. intelligence officials focused greater attention on ways the Nazis would try to use insurance to hide and launder their assets so they could be used to rebuild the war machine…”

And how did Starr benefit from his service? Fritz writes:

“Starr sent insurance agents into Asia and Europe even before the bombs stopped falling and built what eventually became AIG, which today has its world headquarters in the same downtown New York building where the tiny OSS unit toiled in the deepest secrecy.

“Starr died in 1968, but his empire endures. AIG is the biggest foreign insurance company in Japan. More than a third of its $40 billion in revenue last year came from the Far East theater that Starr helped carpet bomb and liberate….”

Drug Connections

The War Conspiracy (Bobbs-Merrill, 1972) by Peter Dale Scott, Ph.D. of UC Berkeley is a book few Americans have seen. The compelling and meticulously documented history of the creation of the Vietnam War was rushed from bookstores and shelves almost as soon as it was published.

Scott, author of Deep Politics and the Assassination of JFK, The Iran-Contra Connection and Cocaine Politics is an expert on the interface between covert operations and the international drug trade.

In Chapter Six of The War Conspiracy, entitled “Opium, the China Lobby, and the CIA,” Scott traces the connections between drug trafficking in Southeast Asia and American intelligence operations. There are detailed references to C.V. Starr and connections with some figures, like CIA veteran Paul Helliwell, who have been irrevocably and blatantly tied to the drug trade.

Those connections also lead directly into the so-called “China Lobby” and firms identified as either CIA proprietaries or “affiliates” such as Sea Supply, Inc. (run by Helliwell), Civil Air Transport (CAT), a CIA proprietary, Civil Air Transport Co., Ltd. (CATCL) — a separate firm not owned by but affiliated with the CIA through CAT– and Air America, an evolution of Civil Air Transport.

In 1957 the Airdale Corporation which owned 100 per cent of Air Americachanged its name to Pacific Corp.

In 1976 CIA General Counsel Lawrence Houston testified before the Senate’s Church Committee looking into intelligence abuses about CIA Air operations. When asked what the one single holding company, above all others, was at the top of CIA proprietary and contract air operations, he identified Pacific Corporation. According to published reports, Houston also testified that the CIA also had interests in investment and insurance companies.

Pacific Corp — which one source has told me is currently insured by AIG — and theCIA have, in the 1990s, been connected with the “laundering” of some 28 C-130 military transport aircraft into the hands of private, forest fire, air tanker contractors in the U.S.

Subsequently, many of those C-130s turned up all over the world. Some were directly involved in drug trafficking and one in particular, operated by Aero-Postale de Mexico, was seized with a billion dollars in cocaine aboard in Mexico City in 1996. [See FTW, Vol I, No 10 – Dec, 1998]

A key figure in the post-war operations was lawyer Tommy Corcoran, a legendary “fixer” in the Roosevelt Administration, who went on to represent Nationalist Chinese financial interests after the Communists took power in 1949.

Corcoran and Helliwell worked closely together in Asia. One of the critical and well-documented U.S. responses to the Communist takeover was to fund remnants of the Chinese Nationalist army — who had fled into Burma, Thailand and Laos —with opium.

Much of that money, along with the drugs, found its way into the U.S. As noted by writers like the late Jonathan Kwitny of The Wall Street Journal in The Crimes of Patriots (Penguin, 1987) and by Professor Alfred McCoy of the University of Wisconsin in The Politics of Heroin (1972, 1991, Lawrence Hill Books), Helliwellpaid the troops using five-pound “sticky” bars of heroin.

Helliwell later went on to head Castle Bank and Trust in Florida and the Bahamas and then was heavily involved with The Nugan Hand Bank in Australia and the U.S.

Both banks have been heavily linked in official investigations to both drug trafficking and money laundering while also moving money for the CIA….

They Even Put It In Writing

In September 1997 a group of business and labor executives reviewed and made recommendations on the use of sanctions by the President of the United States to influence world events. One of those executives was Oackley Johnson of AIG.

The group, called the Sanctions Working Group (SWG) of the Department of State’s Advisory Committee on International Economic Policy, having completed its review of the way the White House has imposed sanctions on foreign governments, completed a detailed report which was sent to the State Department by the Committee head, Michael Gadbaw of General Electric.

The advisory panel called for massive revisions in the way sanctions were selected and imposed in foreign affairs to punish or induce foreign governments to behave the way the U.S. wants.

Approval of the recommendations was unanimous from the business community and opposition was unanimous and acerbic from organized labor representatives who sent their dissent separately to the State Department. The report, they said, cared about nothing but the financial interests of major U.S. Corporations.

AIG has also been connected, albeit indirectly, to a major money laundering case.

As the insurance carrier for the Bank of New York (BoNY) they are defending BoNY in a suit filed this year by BoNY shareholders charging mismanagement of the bank. That suit arose from revelations … in the major media that BoNY had been involved in laundering between $7 and $10 billion in criminal money out of Russia during the 1990s under its Chairman, Thomas Renyi.

A credible source has told me, but I have not been able to confirm it, that AIG also insures the U.S. Department of Justice which was charged with investigating BoNY and which decided not to file criminal charges in 1999...

Perhaps no one knows more about your life, not even your immediate family, than the various companies who insure you. Your health, finances, work history, medical records, driving habits and almost every other aspect of your life is recorded in insurance files and records.

Is this necessarily something you want available to the CIA or any part of the government? Remember that the CIA doesn’t operate under the law or respect privacy.

What happens then when a giant like AIG winds up insuring parts of the government or major businesses that violate your rights or break the law?

~ ~ ~

AIG Highlights

· AIG has the largest market capitalization (total value of all shares) of any insurance or financial services organization on the NYSE — $198.4 billion in 2000. It has operations in 130 countries.

· Ranked #7 on Forbes Super 100 list of companies. After GE, Citigroup, BankAmerica, Exxon, IBM and Ford.

· The largest U.S. underwriter of commercial and industrial insurance.

· Operates AIG Financial Services Group, which sells investments, international asset management and “advisory” services.

· The largest seller of retirement annuities in the U.S. through its acquisitions of SunAmerica and American General in 1999 and 2001 respectively.

· AIG is licensed to operate banks in three countries, including the US (1999) and also issues credit cards.


· Originally formed as the Asia Life/C. V. Starr Companies in the 1930s by founder Cornelius Starr who served with the OSS during World War II. The Starr corporation shared the same office building as OSS headquarters in New York, and functioned as an intelligence conduit on shipping, manufacturing and industrial bombing targets in Asia and Germany throughout WW II. [The Los Angeles Times, Sept. 22, 2000]

· Early business centered primarily in China and Asia. Starr interests centered in Asia and Panama.

· 1951 – Changed name to American Life Insurance Company (ALICO).

· Acquired major U.S. insurance companies in the 1950s and 60s.

· 1967 – Incorporated as American International Group (AIG).

· 1969 – First public offering.

· First western insurance company to create joint ventures with Hungary, Poland and Romania in the 1960s.

· In 1980 established joint venture with the People’s Insurance Company of China.

· First insurance company licensed to do business on its own in Japan (1952), Mainland China (1990), and Vietnam (2000).

· Member and staunch supporter of the World Trade Organization. During 1997 WTO negotiations, AIG collaborated directly with Treasury Secretary Robert Rubin to negotiate Asian financial, investment and trade agreements covering 102 countries, which one report described as bullying and marked by “messages back and forth from Geneva to Washington, and…… reports, between the US Treasury and American International Group.” [Third World Economics, No. 175, 16-31, 12/97].

· During the 1990s involved with U.S. investment in Russia (overseen byGoldman Sachs and The Harvard Endowment) through Brunswick Brokerage. Secured a $300 million OPIC (Overseas Private Investment Corporation) guarantee for a Russian investment fund. [Paul Likoudis, Editor, The Wanderer.]

· AIG has “joint venture” interests in Latin America through ZonaFinanciera with Citibank which in May 2001 purchased Mexico’s Banamex and will be placing reported drug money launderer and trafficker Roberto Hernandez on its board of directors.

· AIG insures more than half of the major US airports.

· The world’s “market leader” in leasing and remarketing of advanced technology commercial jet aircraft – “the most modern fleet of aircraft in the world. ” With 2000 revenues of $2.44 billion AIG owns a fleet of 494 jets, 89 of which it “manages” itself. Clients include airlines in U.S., Canada, Europe, Asia, the Middle East and South America where, in 2000, it leased, “additional aircraft to a number of established customers.”

Maurice “Hank” Greenberg, 75 — Chairman and CEO of American International Group (AIG)

· WWII, Served with US Army Signal Corps and Army Rangers

· LL.B., New York Law School, 1950

· Korean War, Investigated reported massacres at POW camps run by UN/US personnel

· Elected AIG President in 1962, CEO in 1967 and Chairman in 1989.

· Former Chairman and Director of the New York Federal Reserve Bank.

· Forbes 111th richest man in the world (More than $4 billion net worth)

· Vice Chairman, Council on Foreign Relations

· Vice Chairman, Center for Strategic and International Studies

· Member, Board of Directors, New York Stock Exchange

· Member, Trilateral Commission

· Member, The Bilderberger Group

· Chairman, The Nixon Center

· Chairman, U.S.-China Business Council

· Chairman, The Starr Foundation

· Accompanied President George Bush on his trade mission to China in 1992

· Major contributor to The Heritage Foundation

· Name floated by Senator Arlen Specter to become CIA director in 1995 (Reported in U.S. News and World Report – 2/20/95)

AIG Board’s Board of Directors as Reported to the SEC

· M. BERNARD AIDINOFF — SENIOR COUNSEL, SULLIVAN & CROMWELL (Attorneys). Director since 1984 — Age 72. [NOTE: Sullivan and Cromwell is the legal firm that was home to Eisenhower Secretary of State John Foster Dulles and his brother Allen Dulles, who was a key OSS leader during WWII and who served as CIA Director under Presidents Eisenhower and Kennedy.]

· ELI BROAD — CHAIRMAN, SUNAMERICA INC (a wholly-owned subsidiary of AIG). Director since 1999 — Age 67.





· ELLEN V. FUTTER — PRESIDENT, AMERICAN MUSEUM OF NATURAL HISTORY Director, Bristol-Myers Squibb Company Consolidated Edison, Inc. (also serves as Trustee of Consolidated Edison Company of New York, Inc.), J.P. Morgan Chase & Co. Director since 1999 — Age 51.

· MAURICE R. GREENBERG — CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AIG, Director, Transatlantic Holdings, Inc. (‘Transatlantic’), which is owned 60.0 percent by AIG. Also serves as Chairman of Transatlantic, a director, President and Chief Executive Officer of C.V. Starr & Co., Inc. (‘Starr’), and a director of Starr International Company, Inc. (‘SICO’) and International Lease Finance Corporation (‘ILFC’); Starr and SICO are private holding companies (see ‘Ownership of Certain Securities’); ILFC is a wholly-owned subsidiary of AIG. Director since 1967 — Age 75.

· CARLA A. HILLS — CHAIRMAN AND CHIEF EXECUTIVE OFFICER, HILLS & COMPANY; FORMER UNITED STATES TRADE REPRESENTATIVE. (Hills & Company provides international investment, trade and risk advisory services). Director, AOL Time Warner Inc., Chevron Corporation, Lucent Technologies Inc. Director since 1993 — Age 67.

· FRANK J. HOENEMEYER — FINANCIAL CONSULTANT; RETIRED VICE CHAIRMAN, PRUDENTIAL INSURANCE COMPANY OF AMERICA. Director, Carey Fiduciary Advisors, Inc. Cincinnati, Inc. Director since 1985 — Age 81.


· EDWARD E. MATTHEWS — VICE CHAIRMAN — INVESTMENTS AND FINANCIAL SERVICES, AIG. Director, Transatlantic. Also serves as a director of Starr, SICO and ILFC, — Director since 1973 — Age 69.

· HOWARD I. SMITH — EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, AIG. Director, Transatlantic, 21st Century Insurance Group (’21stCentury’), which is owned 62.8 percent by AIG. Also serves as a director of Starr, SICO and ILFC — Director since 1997 — Age 56.

· THOMAS R. TIZZIO — SENIOR VICE CHAIRMAN — GENERAL INSURANCE, AIG. Director, Transatlantic. Also serves as a director of Starr and SICO. — Director since 1986 — Age 63.

· EDMUND S.W. TSE — VICE CHAIRMAN — LIFE INSURANCE, AIG. Also serves as a director of Starr and SICO. — Director since 1996 — Age 63.

· JAY S. WINTROB — PRESIDENT AND CHIEF EXECUTIVE OFFICER, SUNAMERICA. Director, Anchor National Life Insurance Company and First SunAmerica Life Insurance Company, wholly-owned subsidiaries of AIG. Also serves as a director of Starr and SICO — Director since 1999 — Age 44.

· FRANK G. WISNER — VICE CHAIRMAN — EXTERNAL AFFAIRS, AIG. Director, EOG Resources, Inc. — Director since 1997 — Age 62. [NOTE: Wisner is the son of former CIA deputy Director, Frank Wisner, Sr. who was present at the creation of the CIA. As head of the Office of Policy Coordination, the forerunner of the CIA’s Directorate of Operations. Wisner, Sr. once boasted,“I can play the media like a mighty Wurlitzer.” In a 35 year career with the State department, Wisner, Jr. served as U.S. Ambassador to India, the Philippines, Egypt and Zambia.]


· AIG is a client of Henry Kissinger and Associates. Kissinger is the Chairman of AIG’s International Advisory Board.

[© Copyright 2001, Michael C. Ruppert and From the Wilderness Publications. All Rights Reserved. May not be reprinted or redistributed without the express permission of the author ]

~ ~ ~

For more, GO TO > > > The Chubb Group; The Secret Nests; The Kissinger of Death


C.V. Starr – Money-losing insurance agencies at the time AIG went public in 1969.

– Business Purpose: Underwrites specialty insurance and owns AIG stock.

– Relationship to AIG: AIG paid $77 million in commissions to Starr last year – 36% of Starr’s gross revenues.

– CEO: Hank Greenberg.

– CEO Pay: Undisclosed.

– Board: Among 14 directors are Greenberg and six other insiders on AIG board.

– Ownership: Greenberg owns 21.75%; 70 other AIG officers and retirees own rest.

See also: Starr International

For more, GO TO > > > The Starr Foundation


Maurice R. Greenberg – CEO of American International Group (AIG).

From AFL-CIO Executive Pay Watch:

In 1998, “Hank” Greenberg bulldozed in an amazing $21.47 MILLION in salary, bonus and other compensation from AIG! Plus, you can add in over $5.48 MILLION more in stock option grants for a total of over $26.95 MILLION. But hold on, Greenberg has also accumulated over $63.3 MILLION in unexercised stock options from previous years.

~ ~ ~

In 2000, Maurice R. Greenberg raked in $24,407,694 in total compensation from American International Group.

In addition, the American International Group executive took home $29,505,211in stock option exercises from prior grants.

And Maurice R. Greenberg has $127,031,474 in unexercised stock options from previous years.

~ o ~

And, to take a candid gander at two green birds, Greenberg & Greenspan, cooing together, GO TO > > > Maurice R. Greenberg

~ o ~

For more, GO TO > > > The Starr Foundation


Jeffrey W. Greenberg – CEO, President of Marsh & McLennan. Son ofMaurice “Hank” Greenberg.

From Business Wire – 11/18/99 – The Board of Directors of Marsh & McLennan Companies (MMC) today elected Jeffrey W. Greenberg CEO of the company. Mr. Greenberg who continues as president of MMC, succeeds A.J.C. Smith, age 65, who will remain chairman of the board until he retires from the company at its 2000 annual meeting. Mr. Smith will continue as a member of the company’s board.. . . Mr. Greenberg, age 48, was elected president of MMC in January 1999, at the same time his planned succession to the CEO position was announced. . . .

Mr. Greenberg began his professional career in 1976 at MMC, where he managed the commercial aviation/aerospace insurance group. He then worked for 17 yearsat American International Group … He rejoined MMC in 1995 and was named chairman and chief executive officer of Marsh & McLennan Capital in 1996….

* * *

From AFL-CIO Executive Pay Watch:

In 2000, J.W. Greenberg raked in $26,755,490 in total compensation fromMarsh & McLennan. And J.W. Greenberg has $37,484,688 in unexercised stock options from previous years.

* * *

[A Catbird Note: It was during Greenberg’s tenure with American International Group (AIG) that Bill Clinton’s “personal piggybank,” Arkansas Development & Finance Authority, did millions of dollars in questionable deals with AIG, including helping finance the formation of Coral Reinsurance Company in Barbados.]

For more, GO TO > > > The Marsh Birds


Arkansas Development and Finance Administration (ADFA) – FromThe Secret Life of Bill Clinton: . . . In 1989 the Arkansas Committee started investigating the alleged nexus of drug-running, money-laundering, and covert activities linked to Mena Airport.

The Arkansas Committee’s lead advocate, Mark Swaney, came to suspect that(Dan) Lasater and others were laundering funds through the Arkansas Development and Finance Administration (ADFA), a state-controlled investment bank created by Governor Clinton in 1985 to provide “low interest finance for economic development.” . . .

There was no need for Clinton to create ADFA. The state already had theArkansas Housing Development Agency and the Arkansas Industrial Development Corp (later made famous by a clerk named Paula Corbin Jones)….

ADFA gave Clinton a patronage machine that answered to the Governor alone….

As James Ring Adams reported in The American Spectator, it was designed with the help of a Boston consultant named Belden Daniels and allowed Clinton to tap into the huge reserves of the Arkansas Teachers Retirement System. At the same time, Clinton steered bond business to Lasater, and low interest industrial loans to the others in the Arkansas group — Seth Ward, for instance, the father-in-law of Webster Hubbel — frequently without due diligence and over the objections of the agency staff.

“They were giving money away like candy to the insiders,” said Mark Swaney….

Funds had been flowing offshore

ADFA had done at least $250 million worth of business with the Fuji Bank, Grand Cayman Branch . . . It was a nice piece of arbitrage profiteering…. Whether the money…came back from Grand Cayman is anybody’s guess….

In 1987 ADFA borrowed $5.04 million from Japan’s Sanwa Bank to buy stock in a Barbados company called Coral Reinsurance….

The activities of Coral Reinsurance triggered an investigation by the Delaware Insurance Department in 1992, which caused panic at ADFA….

Swaney believes that ADFA was created by Clinton as an instrument for Dan Lasater. What we know is that Lasater wrote at least eight letters to Bill Clinton recommending people for the board of ADFA. Most of them were appointed….

For more, go to > > > The Donkey Nests


AXA Financial – One of the world’s largest insurance/financial companies, based in France.

From Reuters News, 6/2/00:


by Joan Gralla

The World Jewish Congress on Friday said European insurers still have to make good on prewar policies sold to Holocaust survivors— even if the policies were cashed-in by Nazis.

Elan Steinberg, executive director for the advocacy group, said this was one issue he would stress on June 21, when the International Commission on Holocaust-era Insurance Claims meets in London. The WJC is a member of the commission, which is auditing Europe’s insurers to see if they cheated Holocaust families by failing to honor prewar policies.

“It is grotesque to describe a policy paid to a murderer as a paid policy,” Steinberg told Reuters. He explained that it was common practice for the Nazis to set up so-called blocked accounts— accounts held in the name of the recipient that could only be tapped by the Nazis.

“I have actually heard insurance representatives claim that since they paid those policies out they want blocked accounts considered paid claims,” he said….

Germany’s Allianz, France’s AXA, Italy’s General Assicurazioni, and Swiss insurersWintherthur and Zurich Allied, which participate in the commission, had all agreed to use relatively undemanding standards of proof because of the special nature of Holocaust claims.

In an internal document obtained by Reuters, the Washington, D.C.-based commission has accused the five insurers of wrongly rejecting some claims from Holocaust families by asking for documents that they cannot possibly supply. Few, if any, survivors walked out of concentration camps with insurance documents, bank books or other financial records….

* * *

So, just where did the billions of dollars in Holocaust victims’ money go over the past half-century? Well, only the Third Reich and Robert Rubin may ever really know, but here are some possibilities:

AXA Financial is the 8th largest institutional investor inColumbia/HCA; the 7th largest in Barclays Bank; the 4th largest in Bank of America; the 3rd largest in Citigroup; the 3rd largest in American International Group; the 3rd largest in Merrill Lynch; and last but not least, AXA Financial is the . . .

(. . . drum-roll . . .)


* * *

For more, GO TO > > > Dirty Gold in Goldman Sachs?


Blackstone Group – Private equity merchant bank.

July 30, 1998

AIG to Invest $1.35 Billion in
The Blackstone Group and Its Funds

From Business Wire

NEW YORK – American International Group, Inc. (AIG) and The Blackstone Group today announced the initiation of a long-term investment agreement valued at approximately $1.35 billion.

Under the terms of the agreement between the two firms, AIG will acquire a 7% limited partnership interest in The Blackstone Group and its affiliated companies for $150 million. In addition to its investment in The Blackstone Group, AIG has agreed to invest over a number of years an estimated $1.2 billion as a limited partner in future private equity, real estate, and other funds The Blackstone Group sponsors.

The formalization of this relationship comes after years of close cooperation between AIG, the global insurance and financial services organization, and Blackstone, the private merchant bank.

M.R. Greenberg, Chairman and Chief Executive Officer of AIG, has served as an Advisory Director of The Blackstone Group since Blackstone established its first advisory board in 1989….

Blackstone’s co-founders, Peter G. Peterson (Chairman) and Stephen A. Schwarzman (President and CEO), said in a joint statement, “AIG is one of the very best managed and most profitable financial services organizations in the world. … We deeply appreciate the fact that AIG has decided to make an equity investment in our firm and a major new long-term commitment to our funds….”

* * *

February 16, 2000

American International Group, Inc., the Blackstone Group L.P. and Kissinger Associates, Inc. Announce a New Strategic Advisory Venture

From Business Wire

NEW YORK – American International Group, Inc. (AIG), The Blackstone Group L.P. and Kissinger Associates, Inc. announced today the establishment of a new venture to provide financial advisory services to corporations seeking high level independent strategic advice.

Each party to the venture brings unique value, skills, and relationships. Kissinger Associates, which is chaired by former U.S. Secretary of State Henry Kissinger, is a strategic advisor to CEOs and senior executives of numerous global corporations. AIG is the leading international insurance and financial services organization with an unmatched worldwide network, and it also sponsors private equity funds in many parts of the world, particularly in Asia. The Blackstone Group, in addition to sponsoring private equity, real estate, liquid alternative asset, and mezzanine funds, is a pioneer in cross-border mergers and acquisitions and has advised on hundreds of billions of dollars worth of M&A and restructuring assignments.

Together, the three firms will enjoy excellent access to business leaders worldwide and will offer a unique set of client services. The venture will operate globally and will take advantage of the existing relationships between the partners.

AIG has an ownership interest in Blackstone and is an investor in several of Blackstone’s private equity funds;

AIG and Blackstone have a joint venture, specializing in restructuring and M&A advisory services in selected Asian countries.

Henry Kissinger chairs both AIG’s International Advisory Board and the advisory boards of several AIG-sponsored Infrastructure Fund….

Henry Kissinger, Chairman of Kissinger Associates said, “Hank Greenberg,Pete Peterson and I have been close friends and business associates for decades. This venture of our three firms is a great opportunity to provide a new level of service to multinational companies in the contemporary political and economic framework.”….

Kissinger Associates, which is chaired by the former U.S. Secretary of StateHenry Kissinger, is a leading consulting firm based in New York City. Thomas F. McLarty, formerly Presidential Chief of Staff and Latin American Envoy, recently joined the Firm as Vice Chairman.

Kissinger Associates provides strategic and geopolitical consulting services to multinational corporations, including assistance in forming joint ventures and guidance in solving business problems in foreign countries….

For more, GO TO > > > The Blackstone Group; Birds in the Lobby; The Kissinger of Death


Carla A. Hills – Chairman and CEO of Hills & Company, International Consultants. The firm provides advice to U.S. businesses on investment, trade, and risk assessment issues abroad, particularly in emerging market economies.

Hills currently serves as a Member of the Board of Directors for American International Group, Chevron, Lucent Technologies Inc., and Time Warner. She is a Co-Chair of the International Advisory board of the Center for Strategic and International Studies; a Vice Chair of the National Committee on U.S.-China Relations and U.S. China Business Council; a Member of the Board of Trustees of the Asia Society, the Council on Foreign Relations, the Institute for International Economics, and the America-China Society; and a Member of theTrilateral Commission and the Inter-American Dialogue.

Hills served as United States Trade Representative from 1989-1993. As a member of President Bush’s Cabinet, Hills was the President’s principal advisor on international trade policy. She was also the nation’s chief trade negotiator, representing American interests in multilateral and bilateral trade negotiations throughout the world.

Hills was chairman of the Urban Institute from 1983 through 1988, and was a member of the Executive Committee of the American Agenda, co-chaired by Presidents Ford and Carter. In 1981-1982, she served as Vice-Chairman of President Reagan’s Commission on Housing and in 1985-1986 as a member of the President’s Commission on Defense Management. Hills has been active in theAmerican Bar Association, serving as Chairman of the Antitrust Section 1982-1983, and as Chairman of the Conference of Section Chairmen in 1983-1984.

From 1974 to 1975, she was Assistant Attorney General, Civil Division, United States Department of Justice.

In 1975, Carla Hills, already serving as an assistant attorney general, was named by Republican President Gerald Ford as Secretary of the Department of Housing and Urban Development, becoming the third woman in the US to hold a cabinet-level position. Her lack of relevant experience was somewhat controversial during the appointment hearings. She was succeeded, when Democratic President Jimmy Carter took office, by Patricia Robert Harris, in 1977.

In 1989, President George Bush appointed her to another cabinet level position, this time as US Trade Representative. (At the same time, Bush appointedElizabeth Dole, the former Secretary of Transportation, as Secretary of Labor.)

A free trade advocate, Hills was the primary US negotiator of the North American Free Trade Agreement (NAFTA).

She was first offered an appointment as assistant US Attorney by Elliot L. Richardson in 1973, but he resigned shortly thereafter during the Watergate scandal. The offer was renewed by his successor, William B. Saxbe, in 1974.

From 1978 through 1989 she was active again in her profession of law; after 1993 she has worked as a consultant and public speaker. She was one of the founders of the Forum for International Policy.

Hills co-founded the Los Angeles law firm of Munger, Tolles & Hills, where she was a partner from 1962-1974. She was an Adjunct Professor at the University of California at Los Angeles Law School, teaching antitrust law, and co-authored theAntitrust Adviser, which was published by McGraw-Hill.

For more about Carla Hills, GO TO > > >: Biotech Birds; Hail to the Chief; HUD; The Sinking of the Ehime Maru; The Story of Enron


Coral Reinsurance – A strange deal in Barbados.

From: The Strange Clinton – Rubin – Insurance Industry Connection.

June 13, 1997

As American Deposit Corp. learned the hard way … strong ties exist betweenClinton, Secretary of Treasury Robert Rubin and the insurance industry.

Insurance industry representatives secretly approached the IRS to issue damaging proposed regulations to the Retirement CD and the Treasury Department pressured the IRS to acquiesce.

Some say that campaign fund contributions were at the source of this action…

But was this the first time Clinton, Rubin and the insurance industry acted together for a dubious project? Apparently not. A strange and convoluted story begins in Arkansas in 1987.

In that year American International Group, Inc., headed by Maurice Greenburg, founded an offshore reinsurance company in Barbados. For several years, AIG denied being affiliated with Coral Reinsurance, as it was named….

While Bill Clinton was governor of Arkansas, he founded the Arkansas Development Finance Authority, a government agency empowered to issue industrial bonds. The ADFA came to the attention of the Arkansas Committee, a group investigating rumors of drug trafficking out of the Mena, Arkansas airport.

Observing the adage, “follow the money,” they were lead to the ADFA. And the ADFA had some strange dealings….

The ADFA borrowed $5 million from the Chicago branch of Sanwa Bank. It then purchased slightly over $5 million in stock of Coral Reinsurance, the Barbados insurance company founded by AIG. Coral then deposited the $5 million, along with $55 million in other investors’ stock purchase funds, in Sanwa Bank.

The net result was the bank loaned the money and got it all back in days. . . .

This strange deal was the scheme on Goldman Sachs, headed at the time byRobert Rubin.

Goldman also provided guarantees to ADFA, such a put agreement should ADFA not be permitted to own the stock. (It is against the Arkansas Constitution for the government to own stock in corporations.)…

Some reporters draw inferences from several facts: Barbados has lax banking regulations and tight corporate secrecy laws preventing outsiders from learning corporate ownership; and when ADFA was set up, the legislation prohibited the state auditors from examining the agency…

* * *

From The Washington Weekly, Mar. 17, 1997:


After Reps. Spencer Bachus (R-Ala) and Henry Bonilla (R-Texas) voted to extendMost-Favored-Nation trade status for China last year, they received an invitation from the China Government to tour major cities in Red China. And who paid for their trip?

Not only the Chinese Government, but also American International Group, with money laundered through the National Committee on United States-China Relations and the Freeman Foundation, reported the newspaper Roll Call last week….

American International Group is headquartered in Barbados and operates Coral Reinsurance.

Where have we heard that name before? Oh yes! In Arkansas. In 1986 the notorious Arkansas Development Finance Authority borrowed $5,000,000 from a Japanese bank’s Chicago branch as part of a $60,000,000 deal to purchase stock in Coral Reinsurance.

The deal was brokered by Goldman Sachs, whose head Robert Rubin is now Treasury Secretary. On the board of directors of AIG is one Lloyd Bentsen, former Treasury Secretary….

* * *

For more on the Web: Gray Money

For more on Goldman Sachs, GO TO > > > Dirty Gold in Goldman Sachs


John A. Graff – Head of AIG’s international retirement savings unit.

November 6, 2002

AIG Forms New International Retirement Savings
Unit to be Headed by John Graf

NEW YORK–(BUSINESS WIRE)--American International Group, Inc. (AIG) has announced that it has formed a new international retirement savings unit that will leverage AIG’s market leading U.S. retirement savings business with its unsurpassed global network, capitalizing on the brand recognition, distribution force and customer service expertise of local AIG companies.

John A. Graf, AIG Executive Vice President, Retirement Savings will head the international retirement savings unit. As part of this initiative, AIG life insurance operations in overseas markets will establish local retirement savings businesses, with managers of these businesses reporting jointly to Mr. Graf and local life insurance executives. AIG’s foreign life network encompasses more than 70 countries, including many where AIG businesses have been active for more than 50 years.

Mr. Graf, who will be located in New York, will continue to serve as Vice Chairman and a member of the Board of Directors of AIG SunAmerica Inc., drawing upon the capabilities of AIG’s domestic retirement savings businesses to support international growth initiatives.

Mr. Graf was named Vice Chairman of AIG SunAmerica Inc. following AIG’s acquisition of American General Corporation in 2001 and was elected AIG Executive Vice President, Retirement Savings in 2002. He was Senior Vice Chairman, Asset Accumulation at American General when that company was acquired by AIG.

He joined American General as President of Retirement Services in 1998, following American General’s acquisition of Western National Corporation, where he had served as Vice Chairman and Chief Marketing and Administrative Officer. Mr. Graf began his 20-year financial services industry career with John Hancock….

Commenting on the announcement, AIG Chairman M. R. Greenberg said, “The need for individuals to provide for their own retirement is a worldwide issue, especially in the large majority of countries where state run pension programs are inadequate. We have a major opportunity to introduce our expansive product portfolio, advisory skills and marketing expertise into overseas markets where AIG has extensive and longstanding operations.

“In many markets, we already have been successful serving, with a wide range of products, a full array of the financial needs of our large policyholder base. With a global franchise unmatched by any other financial services organization, AIG is uniquely positioned to become the leading provider in the worldwide retirement savings market in the years ahead.

John Graf is a proven executive with extensive experience in the development and distribution of retirement savings products. He will provide strong leadership as we build our retirement savings business in overseas markets.”

* * *

–Catbird Catcall: Do you think Mr. Graf knows where to put HIS retirement savings?

Insider Trading:

American International Group, Inc.


The following transactions were listed on a Form 4 document filed with the SEC.

Title: Officer
Remaining Shares: 4,245

Trade Date









$8 Mil


Insider filings are updated daily and are based on forms filed monthly with the SEC.


For more on Sun America, GO TO > > > The Royal & Sun Alliance

* * *

February 4, 2003

AIG stock falls 10 pct after
$1.8 billion charge

By Bill Rigby, Reuters

NEW YORK, Feb 4 (Reuters) – American International Group Inc. (AIG) sent shock waves across the world insurance industry on Tuesday, as it admitted it had drastically underestimated U.S. liability claims on its books.

AIG, the world’s largest insurer, is to take a $1.8 billion charge to pay for heavier-than-expected workers compensation and executives’ liability claims, which have built up over the past few years….

AIG’s shares fell as much as 10 percent in early trading, recovering slightly in the afternoon. Shares of rivals ACE Ltd. (ACE), Travelers Property Casualty Corp. (TAPa) and Chubb Corp. (CB) — which also announced a small reserve addition on Tuesday — all fell sharply….

AIG’s stock closed down fell $3.63, or 6.5 percent, at $51.70 on the New York Stock Exchange, where it was the most heavily traded stock, with almost 19 million shares changing hands.

The shares are down more than 51 percent from all-time highs around $103at the end of 2000….

© 2003 Reuters

* * *

For more on Retirement Savings, GO TO > > > The Great Nest Egg Robberies


Lloyd Bentsen – Former U.S. Secretary of Treasury in the Clinton administration from 1993 -1994.

Bentsen sat on the Board of Directors of American International Group at the time Governor Clinton’s Arkansas Finance & Development Authority (with help from Goldman Sachs and Robert Rubin) invested in AIG’s Coral Reinsurance in Barbados.

Bentsen, along with Hawaii’s ex-governor (and FOB) John Waihee, are also lobbyists with the Washington, D.C.-based law firm Verner Liipfert Bernhard McPhearson Hand which was hired by Bishop Estate to lobby against the federal“interim sanctions” legislation.

The state Attorney General’s Office disclosed that the trust paid the firm more than $900,000 for its unsuccessful lobbying efforts on intermediate sanctions legislation between 1995 and 1998.

* * *

New Holland N.V. Press Release, 10/29/96:

Former U.S. Treasury Secretary Bentsen appointed
Chairman of New Holland N.V.

New Holland N.V. announced today that Lloyd Bentsen, the 69th U.S. Treasury Secretary, who played a pivotal role in the Clinton Administration during 1993 and 1994, and former U.S. Senator from Texas, has been appointed Chairman of the Board of Directors of New Holland.

Senator Bentsen was appointed Treasury Secretary by U.S. President Clinton in Jan, 1993, and served in the Clinton Administration until December, 1994. As Secretary he was a major policy adviser to the President and was credited with playing a key role in the Administration’s successful efforts to reduce the federal deficit and to increase trade and economic opportunity through NAFTA (North American Free Trade Agreement) and GATT (the General Agreement on Trade and Tariffs.)…

Before joining President Clinton’s Cabinet, Lloyd Bentsen, born in Texas, was one of the most powerful members of the U.S. Senate where he served from 1971 until his appointment as Secretary of the Treasury. He was Chairman of the Senate Finance Committee, which has the responsibility for tax and trade issues. He also served as Chairman of the Joint Committee on Taxation and the Joint Economic Committee. In 1988, he was the Democratic Party’s nominee for Vice President of the United States.

Mr. Bentsen began his public service as a Texas County Judge, then served three terms in the U.S. House from 1948 to 1954. After that he pursued a successful business career….

* * *

Reporter Sally Apgar, in the 02/18/00 edition of The Honolulu Advertiser, revealed that the ousted Bishop Estate trustees used the trust money to “enlist” the aid of U.S. Sens. Dan Inouye and Daniel Akaka in 1995 to influence fellow members of Congress to vote against “interim sanctions” regulations that threatened the trustee’s $1 million-a-year paychecks.

According to Apgar:

Thirteen confidential memos during the fall of 1995 through April 1996 detail the trustees’ strategy against the bill…

The memos express the trustees’ intent “to kill the measure” and their recruitment of influential contacts such as Inouye, Akaka and the Rev. Jesse Jackson. They also targeted others, including Sen. Daniel Patrick Moynahan ofNew York and even White House insiders such as Leon Panetta, then PresidentClinton‘s chief of staff, to win support….

The memos give a glimpse of the behind-the-scenes political power and influence the former trustees once wielded and describe a costly, intensive effort to protect their interests.

As previously reported, the ousted trustees hired former Gov. John Waihee and his Washington, D.C.-based law firm Verner Liipfert Bernhard McPhearson Handto lobby against the federal legislation…

 Other Verner firm members enlisted in the effort included former Treasury Secretary Lloyd Bentsen of Texas, former Senate Majority Leader George Mitchell of Maine and former Texas Gov. Ann Richards….

The state Attorney General’s Office has said previously that the trust paid the firm more than $900,000 for its lobbying efforts on intermediate sanctions legislation between 1995 and 1998.

Waihee alone was in charge of swaying Erskine Bowles, then assistant to the president and deputy chief of staff, and Doug Sosnick, then assistant to the president and director of political affairs….

Mark McConaghy of PriceWaterhouseCoopers LLP, a longtime tax adviser to the trust, was charged with contacting Leslie Samuels, then assistant secretary for tax policy….

Congressman Neil Abercrombie (D-HI) is also mentioned in the memos. For example, the Oct. 12 memo said, “Congressman Abercrombie is prepared to speak to Rep. Gibbons, the ranking minority member, Charles B. Rangel (D-NY) andAndrew Jacobs, Jr. (D-Ind) as well as GOP Rep. Nancy Johnson….

For more, GO TO > > > Dirty Money, Dirty Politics & Bishop Estate


Robin Campaniano – Former Hawaii Insurance Commissioner who became president of AIG Hawaii soon after leaving his commissioner’s post.

From the U.S. Dept. of State web-site:


Asian Pacific American Federal Foreign Affairs Council
“Conference on U.S.-Philippine Relations”

Robin K. Campaniano

President, Chief Executive Officer, AIG Hawaii Insurance Company

U. S. Department of State
May 13, 1998

“United States-Philippines: A Centennial Celebration”
The US Business Sector’s Perspective on
Doing Business in the Philippines

It is my great pleasure and honor to be here on this momentous occasion, celebrating the eclectic cultural, historical and political heritage of the Philippines. I came poised, ready to discuss the Philippine economy, history and future, and the effects of the current Asian crisis….

Given the current conditions in the Philippines, what would the American/International business community do with respect to investment in, or the transaction of business in the Philippines? What opportunities, if any, present themselves to business people looking at the Philippines?…

With the world economy booming because of latent consumer demand, the business community has become increasingly multinational. Furthermore, recent events suggest that the merger mania which is sweeping the business world should continue.

Indeed, what I find particularly fascinating is that what has, and will transpire in the past few weeks and months may set the stage for the world economy for many years to come. I would like to share these thoughts with you from the perspective of one working for one of the world’s largest multinational companies, one that’s been in the Philippines for over 50 years.

American International Group exists in some fashion or another, in 140 jurisdictions throughout the world. Indeed, we do more overseas business than all but a small handful of US based companies. AIG does more business overseas than ITT, AMEX, Sears and Northwest Airlines combined.


I note, in remarks offered by President Ramos during his recent trip here and echoed by Ambassador Rabe earlier today, that the relationship between the United States and the Philippines can be characterized as one of a partnership. Of equal partners….

I believe this concept of partnership is extremely important in characterizing any future relationship between the U.S. and the Philippines, and must be considered by businesses doing business in the Philippines.

The Elections and Political Stability

As we await the final election results, we witness a rarity in Asia, and perhaps in many other parts of the world: two ex-presidents of great influence awaiting the peaceful transfer of power to a third. American businesses are generally impressed by the prudent financial management and response by the Ramos administration to the Asian crisis, but will be carefully watching the new administration for signals of continuity of economic liberalization, fiscal stability and overall reform.

Of note, President Ramos has reached out to previously disenfranchised elements of the political world — communist insurgents, military rebels, and Islamic separatists.

While there has been some concern about Mr. Estrada, the fact remains: since President Quezon in 1935, there have been ten peaceful successions of presidents and administrations, including the non-violent removal of the dictatorship in 1986….

Asian Crisis

Much has been said about the crisis among Asian economies, and we can not ignore this issue in looking at the Philippines. This crisis has revealed that admiration for the models of fast economic growth in Asia, was perhaps too lavishly given: the integration of national and regional economies into the international monetary and economic systems have made these economies subject to the whims and caprices of market forces….

The Philippines has been able to formulate its own workable approaches which minimize the impact of the crisis. Consequently, the Philippines has coped well with this crisis and stands a good chance of being among the first to recover from it. For its prudent management of the crisis, the country has earned the respect of the outside world.

Both Washington and Wall Street are signaling their recognition that the Philippines has practiced effective crisis management. Even though currency and the stock market have fallen in recent months, and as unemployment has crept upwards, the Philippines have not experienced the banking and real estate chaos that has afflicted other Southeast Asian countries.

Indeed, while countries across Asia, from Thailand to Indonesia to South Korea are eagerly looking to the IMF for help, the Philippines has left IMF supervision after 35 years, having successfully met the fund’s targets for economic stability. No doubt, we are witnessing the transformation of the country as the erstwhile “Sick Man of Asia” to a more robust, sophisticated player on the world stage.

Economics and Internal Policies

Under Cory, limits were imposed on the amount of foreign capital allowed in joint venture firms. But the government soon found that Filipino partners couldn’t raise enough capital, and thus controls were gradually relaxed.

No doubt, such mistakes were costly. But the country has learned lessons, while other countries, such as Malaysia, have not.

Malaysia is still enamored with the concept of limiting foreign ownership in Malay entities, which, in the turmoil existing in this region, can only work to restrict opportunities for growth there.

Other actions, such as the prudent relaxation of Central Bank restrictions on foreign exchange and the removal of barriers to foreign investment in various sectors have served to bolster foreign confidence in the Philippines, resulting in increased investment, and a growing and stable economy….


The international business community has not been idle in the Philippines, and in recent years there has been considerable investment. Ford recently invested US $100 Million in an auto assembly plant. Seagate has planned to open a plant in the Philippines. Federal Express established its Asian hub in Subic, and UPS followed suit by establishing operations in Manila. Intel manufactures integrated circuits,Timex has a plant in Cebu, and Purina manufactures packaged foods. United Technologies produces electrical systems and electronic cables for autos at the Mactan Export Processing Zone.

Recently, Lightbridge opened a regional office in the Philippines. Lightbridge produces cellular anti fraud systems. Two weeks ago, Warner Brothers andAyala Land announced the formation of a partnership to open a series of Warner Brothers Stores.

Even Hawaii based businesses are getting involved in Philippine opportunities. Hawaii based architectural and engineering firms have been active in resort and hotel design and development and landscaping projects throughout the country….

Opportunities for investment are manifold. U.S. Ambassador Hubbard has noted that areas such as construction, power generation, telecommunications and information technology, defense spending all provide ample opportunity for investment.

BOT infrastructure projects in areas such as power, water and sewers, roads and transportation likewise provide fertile areas for consideration.

An opportunity not to be overlook would be those created throughprivatization.

The government is attempting to divest everything from the national airline to electrical power systems, banks to water supplies. Recently, Philippine Airlines,Petron and the National Power Company underwent privatization, Manila Hotelwas attempted, and on the drawing boards are plans for Filoil Refinery, Batangas Land Company, Malangas Coal, and Philippine Sugar.


The fascinating part of this discourse is that events of the recent past, indeed, of the past few weeks may alter the course of action of business, dictate flows, trends for years to come.

In the culture that global business leaders inhabit where shared values of open markets, hard money, and standardized technology increasingly take precedence over old fashioned nationalism, transnational combinations are logical and becoming more commonplace.

Just a few months ago, the huge merger of Bank of America and Nations Bankwas announced. Yet this was soon eclipsed by the merger of Citicorp and Travelers, created the world’s largest corporation. Just last week, Daimler Benz andChrysler agreed to join forces and just this Monday, Ameritech and SBC proposed a merger of the two large telecommunication corporations.

Such activity is not limited to America.

Bridgestone from Japan is the owner of Firestone, and that very proper English company, Cadbury Schweppes owns the very Southern, avant garde, Dr. Pepper.

More and more, national boundaries, cultural variations, and geography aren’t stopping business leaders who see a chance to expand. There has been a rapid blurring of the international business culture in the global economy.

As companies get bigger and more multinational, will people swear allegiance to their company, or to the piece of ground where they live?

I recall reading a comment on the Mercedes-Chrysler merger to the effect that there will be no more German, or American companies, only successful and unsuccessful companies.

So what about the Philippines, are there any consequences there of this world wide merger phenomenon?…


It may appear that the current economic crisis has made conditions ripe for an increase in merger activity. If the Daimler-Chrysler activity signals the beginning of a new trend, companies may become less hesitant in seeking mergers.

As the benefits of lean structuring and merger led growth becomes more apparent, it may actually become a necessity by some Philippine and other Asian corporations who are seeking not merely to grow, but just to survive in an ever competitive and global marketplace.

Rodolfo Salazar of Bayantel has noted that the economic turmoil has made it more imperative for telecommunications companies to consolidate. Additionally,Philippine bank mergers are expected to increase as competition gets tighter. In Bangko Sentral’s latest report to President Ramos, it was noted that the financial crisis which started with the peso devaluation has led to four casualties.

And, there have been other mergers. Early this year, the Bank of Southeast Asiaand Development Bank of Singapore announced details of a merger. DBS bought 60% of the Philippine commercial bank and infused $500 million in capital. Earlier, PDCP bank and First Philippine International Bank, and Bank of the Philippine Islands and Citytrust Banking Corp. merged. In 1996, Vitarich Corporation-Breeder Master Inc. and Philippine American Poultry Breeders merged to achieve optimum efficiency in operations.

Other American companies have extensive dealings in the Philippines. Companies such as Southern has established itself, selling power in the country as well as through other countries in the region. Will it now seek to acquire or merge with other utilities in the Philippines?

As the Philippines’ leading trading partner, the U.S. should actively identify and anticipate such opportunities as they arise. The best way to do this would be to continue fostering ties with the Philippine government and business….


Perhaps the ideal model for growth of a business within a country is that of a long-term partner. Certainly businesses exist to maximize profits for their owners. But if there is problem with a country’s infrastructure, the company can help build that infrastructure. If there is a lack of local upper management talent, cultivate such talent.

AIG has been present in the Philippines for over 50 years, commencing with the formation of the Philippine American Life Insurance Company in 1946. Now known as The Philippine American Life and General Insurance Company, our operations will move into the 46 story Philamlife Tower in Makati late in 1999. One of Manila’s tallest structures is a symbol not only of our commitment to the Philippines but our confidence in the country for years to come.

We are quite active; we have participated in equity investments in PILTEL and theBauang Power Plant. Through AIG’s Asian Infrastructure Fund, we have invested deeply in the country’s infrastructure in our participation in the financing of theMetromanila Skyway.

We maintain equity interests in entities such as the Bank of the Philippine Islands, and DMCI Holdings, a construction company. Yet our investments are not limited to our own holdings; we have offered commercial loans for factory construction and expansion, plant modernization for companies such as Coca Cola, Proctor and Gamble, Philippine Refining Corporation, Benguet Mining, and of course, San Miguel….

Oh yes. We sell insurance, too.

Through 180 branch offices, our workforce of 7,000 agents and employees represent the largest insurance operation in the country protecting the lives of over one million policyholders in the Philippines.

The influence of the company extends far beyond the shores of the Philippines. During the 1950’s and 60’s, there were scores of Philamlife insurance agents canvassing the plantation camps of Hawaii selling policies. I am proud to have inherited that network of Filipino agents, who may have provided vital life insurance products to kababayan….

I submit it is through partnership with companies such as Philamlife that the Philippines will be prepared to take its place as a leader in the region as we enter the next century….

For more on Robin Campaniano, GO TO > > > Woo vs. Harmon

* * *

From When Corporations Rule the World, by David C. Korten:


For centuries, the indigenous Igorot (“people of the mountains”) of Benguetprovince, Philippines, have engaged in small-scale “pocket mining” of the rich gold veins found on their ancestral lands. The men dug small, round caves into the mountain. Women and children hammered the gold-bearing rocks into nuggets the size of corn kernels.

The lands of the Igorot are now dominated by huge open-pit mines operated by the Benguet Corporation owned in approximately equal shares by wealthyFilipinos, the Philippine government, and U.S. investorsto produce gold for export.

Dozens of bulldozers, cranes, and trucks cut deep gashes into the mountain, stripping away the trees and topsoil and dumping enormous piles of rocky waste into the riverbeds. The local people tell visitors how, with their water sources destroyed, they can no longer grow rice and bananas and must go to the other side of the mountain for water to drink and bathe. Even their mining grounds are threatened, and their rights ignored.

Instead of using water to separate the gold from the rock, as the Igorot do, the mining company uses toxic chemicals, including cyanide compounds, and flushes them down the river, poisoning the water and killing the cattle that drink it. Downstream, rice farmers in the affected area of Panasinan province are losing an estimated 250 million pesos a year as the mine tailings cover their irrigated fields and cause sharp declines in yields, resulting in a net population exodus. Further down the river, fisherfolk in the gulf report substantial reductions in their catch as tailings smother the coral reefs.

It’s good for growth. Benguet and the other major mining companies involved earn combined net profits of 1.1 billion pesos a year – a massive resource transfer from the poor to the rich. Countless such stories are told wherever mining companies operate.

The poor suffer similar consequences when timber companies move in to strip their forests bare, usually without regard for the rights of local people.

As a young peasant woman in a remote community of San Fernando in the southern Philippine province of Bukidnon explained to visitors, “Without trees there is no food and with no food, no life.”

An old man explained that before the logging trucks came to his village, “There was plenty of fish, plenty of corn, and plenty of rice.” People went on to describe how their rivers have changed shape, turned muddier, shallower. During the monsoons, the river now overflows its banks and swallows adjacent fertile fields in formerly flood-free areas. Creeks that once nourished the fields during the dry season have disappeared; landslides have become common during the rainy season. The rat population, which previously found food in the forests and was kept in check by forest predators, now ravages farmers’ fields at night. In a once prosperous community, more than four out of five children suffer some degree ofmalnutrition.

In the name of promoting economic growth, such devastation is often heavily supported by public subsidies. For each ton of mine tailings they produce, the typical Philippine mining company earns 96.73 pesos and pays 0.5 pesos of taxes….

Those who call for expanding the economic pie as the answer to poverty overlook an important reality. Whether or not a person has access to the resources required for survival depends less on absolute income than on relative income.

In a free-market economy, each individual is in competition for access to the limited environmental space, and the person with the most money invariably wins….

Without concurrent redistribution, an expanding pie brings far greater benefit to the wealthy than to the poor, increases the absolute gap between rich and poor, and further increases the power advantage of the former over the latter.

This advantage becomes a life-and-death issue in a resource scarce world in which the rich and poor are locked in mortal competition for a depleting resource base.

If the prophets of illusion who promote growth as the answer to poverty are really concerned with the plight of the poor, let them advocate measures that directly increase the ability of the poor to meet their basic needs not tax breaks for the rich….

For more, GO TO > > > Vultures in the Meadows


Sanwa Bank – The Chicago branch of this Japanese bank played an interesting role in the Clinton – Rubin – Goldman Sachs – American International Group – Coral Reinsurance – and Arkansas Development Finance Authority (ADFA) shell game in 1987.

Watch carefully! Sanwa loaned $5 million to ADFA. ADFA then purchased slightly over $5 million in stock of Coral Reinsurance, the Barbados company founded by American International Group. Coral then deposited the $5 million, along with $55 million in other investors’ funds, in Sanwa Bank.

Under which shell is ADFA’s $5 million??? Surprise! It never left Sanwa Bank (at least not until it found its way into some of the executives’ pockets).

This strange deal was the scheme of Goldman Sachs, headed at the time byRobert Rubin.

* * *, 02/16/98: Japan’s Top Banks Implicated in Bribery Scandal

Two of Japan’s top commercial banks, Bank of Tokyo-Mitsubishi and Sumitomo Bank were implicated Monday in a widening bribery scandal that has shamed the powerful Finance Ministry…

The scandal centers on allegations that two senior ministry bureaucrats were wined and dined by financial institutions in exchange for tipping them off about ministry inspections…

The two officials … were arrested last month on suspicion of taking bribes fromSanwa Bank Ltd, Asahi Bank Ltd, Dai-Ichi Kangyo Bank Ltd, and Hokkaido Takushoku Bank

* * *.

Rueter’s News Service, 02/16/98:

Japan Banks Linked to Bribery Scandal

Two of Japan’s leading banks, Sumitomo and Bank of Tokyo-Mitsubishi, were implicated on Monday in a widening bribery scandal involving officials at Japan’s powerful Ministry of Finance (MoF)….

Tokyo prosecutors on Monday issued a fresh arrest warrant against two MoF inspectors . . . on suspicion of receiving bribes from Sumitomo Bank and Bank of Tokyo-Mitsubishi, as well as Sanwa Bank, in exchange for confidential information. … Many of them were encroached by Kanto-based yakuza, incurring massive losses in failed stock and land speculation….

* * *

Honolulu Star-Bulletin, 3/14/01:

19 Japanese Banks Placed on Credit Watch

Negative Rating Outlook Sends Worldwide Stock Markets Reeling and Pushes the Yen to a 20-Month Low Against the Dollar.

After the close of today’s trading in Asia, Fitch IBCA placed 19 Japanese banks of “Rating Watch Negative” because of concern about their asset quality….

Among the banks are Japan’s largest, including Bank of Tokyo Mitsubishi, Fuji Bank, Sumitomo Bank and Sanwa Bank….

Much of Japan’s bad loan problem is related to the decreased value of land offered as collateral during the bubble economy of the 1980s.

Although billions of dollars of taxpayer money have been funneled to help resolve the bad loans racked up by banks, problem loans still total a staggering 64 trillion yen ($331 billion)

The newest big fear on Wall Street is that Japan’s economic problems will cut into demand in that country for U.S. goods and services – leading to a further drop in American stock prices….

* * *

For more, GO TO > > > Yakuza Doodle Dandies


Starr International – Officers of AIG contributed $110 million in AIG stock from the IPO to create a pool to compensate top AIG employees. Pool is now worth$20 billion.

Business Purpose: Funnels incentive rewards to 600 top executives at AIG outside the purview of AIG’s compensation committee. Also owns golf course and real estate.

Relationship to AIG: SICO gave AIG’s top five execs bonuses worth more than$55 million in 2000.

Chairman: Hank Greenberg.

Chairman Pay: Undisclosed.

Board: Among 15 directors are Greenberg and six insiders on AIG’s board.

Ownership: Greenberg owns 8.3% of voting shares, 11 other AIG officers and retirees own rest.

See also: C.V. Starr

For more, GO TO > > > The Starr Foundation


The U.S.-China Business Council – The US-China Business Council, headquartered in Washington, D.C. serves the business needs of more than 250 major US companies and firms. The Council maintains service offices in Beijing, Shanghai and Hong Kong. . . .

Press Release, June 9, 1999

US-China Business Council Board
Welcomes Eleven

WASHINGTON – The United States-China Business Council today announced the election of eleven senior U.S. business figures to the organization’s Board of Directors.

At its Annual Membership Meeting in Washington, June 9, members of the Council approved a slate of new directors forwarded to the membership by the Council’s Board of Directors at their meeting on June 8.

Council Directors on June 8 also named Michael R. Bonsignore, Chairman and CEO of Honeywell Inc., as the organization’s chairman for 1999-2000.

Executives joining the Council’s Board include the following:

Roger G. Ackerman, Chairman and Chief Executive Officer, Corning Incorporated

Carleton S. Fiorina, Group President, Global Service Provider Business, Lucent Technologies

Durk I. Jager, President and CEO, The Procter & Gamble Company

L. Oakley Johnson, Senior Vice President, Corporate and International Affairs,American International Group, Inc.

J. Bennett Johnston, Chairman, Johnston Development Co., LLC

Sean Maloney, Senior Vice President and Director, Sales & Marketing Group, Intel Corporation

Patrick J. Martin, Senior Vice President – Developing Markets Operations, Xerox Corporation

Terence H. Thorn, International Government Relations and Environmental Affairs,Enron International

Morton L. Topfer, Vice Chairman, Dell Computer Corporation

Henry Wallace, Group Vice President, Ford Motor Company

Lawrence B. Zahner, President, GM China Operations, General Motors Overseas Corporation

In addition to Mr. Bonsignore, the Council’s officers for the coming year include Ambassador Carla A. Hills (Hills & Co.) and Frederick W. Smith (FDX Corporation) as vice chairmen; Edgar Hotard (Praxair, Inc.) as Secretary-Treasurer; Larry L. Simms (Gibson, Dunn & Crutcher LLP) as Counsel, and Robert A. Kapp as president.

# # #







































FAIR USE NOTICE. This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.



Last updated January 8, 2007, by The Catbird.