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Gen Re ordered to produce internal records in court

General Re has been ordered to produce records of its internal investigations in the criminal trial of four of its former executives that is due to begin in Connecticut on 7 January.

US District Judge Christopher Droney ruled that the internal investigation records stemming from interviews of former and current employees should be provided to the court.

The documents could be made available to the defence if testimony given in court conflicts with the earlier investigation's records

Gen Re’s former chief executive Ronald Ferguson, ex-chief financial officer Elizabeth Monrad, and Robert Graham, the reinsurer’s former assistant general counsel, along with Christian Milton, American International Group’s (AIG) former senior vice president of reinsurance, were indicted in Connecticut in September 2006.

The four face 16 charges related to securities fraud and conspiracy in connection with a $500mn finite reinsurance transaction that took place between Gen Re and AIG in 2001.

Another former Gen Re executive, Christopher Garand, was charged with 10 counts.

If convicted of all charges the five face possible maximum sentences that include lengthy prison spells and multi-million dollar fines.

The judge also ruled that AIG provides documents detailing interviews of former or current employees conducted by a law firm during its internal investigation.

Defence lawyers are also seeking copies of communications between Gen Re parent Berkshire Hathaway’s chairman, Warren Buffett’s and other Gen Re executives at the time the reinsurer entered into an allegedly sham reinsurance deal with AIG.

Ferguson subpoenaed Gen Re earlier this month seeking copies of all letters, memos and other written communication during 2000 between Buffett, Jo Brandon, the current CEO of Gen Re and Franklin Montross, its president.

The documents are necessary to counter prosecutors’ contention that Ferguson lied to other Gen Re officials about receiving Buffett’s approval for the AIG deal, Ferguson’s lawyers said.

In a filing supporting the subpoena, Ferguson cited a November 2000 email that he sent to Brandon and Montross reporting “a good discussion with our WEBmaster” - purportedly a reference to Buffett.

Ferguson said he wanted to confirm with Buffett that the AIG deal “passed the NYT test,” meaning that it would not embarrass Gen Re if a story about it appeared in the New York Times.

Buffett had replied, “Yes, but not by a huge margin,” according to Ferguson’s email.

It was the former New York attorney general Eliot Spitzer’s probe into this finite transaction that led to Hank Greenberg’s forced retirement from AIG and a civil case against the industry titan. AIG paid a record $1.64bn to US regulators in 2006 to settle its involvement over the alleged accounting irregularities.

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