Judge dismisses key AIG claims against Starr
A US judge has dismissed several of the claims made by American International Group (AIG) in its attempt to wrest control of a block of its shares from its former CEO and chairman.
The ruling, made in a Manhattan court by US district judge Barbara Jones, dismissed four of the claims, paving the way for several others to be heard in court.
The shares at the centre of the case were held by an investment fund once used mainly to compensate AIG executives and controlled by Maurice “Hank” Greenberg’s Starr International Company (SICO).
AIG counter-claimed against Starr in 2005 after the latter sought possession of an art collection owned by Starr but housed by AIG.
AIG has contended that the shares held by Starr, the company's largest shareholder, should continue to be used to fund employee compensation.
Starr maintains it is under no binding agreement to use the shares it holds to compensate AIG executives, as it did prior to Greenberg’s departure in 2005.
“We are pleased that Judge Jones dismissed most of AIG’s claims in this case, and we look forward to trial on the remaining claims and the opportunity to demonstrate that the facts clearly support Starr,” said the company’s spokesman Glen Rochkind.
The judge dismissed AIG’s claims that Starr's retention of the block of shares was in breach of the deferred compensation programme, and in breach of a contract to both manage that programme and to have AIG executives make up Starr’s board.
Claims that Starr unfairly holds the shares were also dismissed.
However, Judge Jones ruled that other claims – including that Starr breached its fiduciary duty – can now proceed to trial.
“We are pleased that the court will allow our breach of trust claim and related claims to go to trial,” an AIG spokesman said. “These claims are at the heart of our case.”
Two weeks ago, the new CEO of AIG, Robert Willumstad, signalled a thaw in relations with Greenberg after the pair met.
The meeting, described by Willumstad as “positive”, came just four days after the one-time Citigroup executive replaced Martin Sullivan at the insurer’s helm, promising a top-to-bottom review of AIG operations where there would be “no sacred cows”.
The new CEO has pledged to prioritise establishing an “interactive” relationship with Greenberg, in a bid to end strained relations between the parties.
SICO holds around a 9.7 percent in AIG and, with his personal stake and interests through family trusts, Greenberg effectively controls more than 12 percent of AIG shares.