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Final Finite Re scandal exec gets probation

The seventh and final executive convicted over a fraudulent $500mn reinsurance deal that misled investors about American International Group (AIG)'s financial health has been sentenced to two years probation and fined $10,000.

Richard Napier, the former General Reinsurance Corp senior vice president, pleaded guilty to his role in a sham finite reinsurance transaction involving the Berkshire Hathaway-owned reinsurer and AIG.

Napier had faced up to five years in prison and a $250,000 fine for his actions, but the judge exercised leniency in light of his co-operation with government investigators.

The deception was carried out through the use of two fake reinsurance transactions between subsidiaries of AIG and Gen Re, apparently in response to analysts' criticism of a $59mn decrease in AIG's loss reserves in the third quarter of 2000. It led to losses of as much as $597mn for AIG shareholders, according to the US District Judge Christopher Droney.

Six other executives have already been sentenced for charges including conspiracy, securities fraud, making false statements to US regulator the SEC and mail fraud. Five - including former Gen Re CEO Ronald Ferguson and AIG's Christian Milton - were handed down custodial sentences ranging from one to four years.

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