The board of A.I.G. will meet Wednesday to consider joining a $25
billion shareholder lawsuit against the government.
Fresh from paying back a $182 billion bailout, the insurer
American International Group has been running an advertising
campaign with the tagline "Thank you America."
Behind the scenes, the restored insurance company is weighing
whether to tell the U.S. government agencies that rescued it during
the financial crisis: Thanks, but you cheated our shareholders.
The board of A.I.G. will meet Wednesday to consider joining a $25
billion shareholder lawsuit against the government, court records
show. The lawsuit does not argue that government help was not
needed. It contends that the onerous nature of the rescue -- the
taking of what became a 92 percent stake in the company, the deal's
high interest rates and the funneling of billions to the insurer's
Wall Street clients -- deprived shareholders of tens of billions of
dollars and violated the Fifth Amendment of the Constitution, which
prohibits the taking of private property for "public use, without
just compensation."
Maurice R. Greenberg, A.I.G.'s former chief executive, who
remains a major investor in the company, filed the lawsuit in 2011
on behalf of fellow shareholders. He has since urged A.I.G. to join
the case, which could nudge the government into settlement talks.
The choice is not a simple one for the insurer. Its board
members, most of whom joined after the bailout, owe a duty to
shareholders to consider the lawsuit. If the board does not give
careful consideration to the case, Mr. Greenberg could challenge its
decision to abstain.
Should Mr. Greenberg snare a major settlement without A.I.G., the
company could face additional lawsuits from other shareholders.
Suing the government would not only placate the 87-year-old former
chief but also put A.I.G. in line for a potential payout.
Yet such a decision would almost certainly be widely seen as an
audacious display of ingratitude. The action would also threaten to
inflame tensions in Washington, where the company has become a
byword for excessive risk-taking on Wall Street.
Some government officials are already upset with the company for
even seriously entertaining the lawsuit, people briefed on the
matter said. The people, who spoke on the condition of anonymity,
noted that without the bailout, A.I.G. shareholders would have fared
far worse in bankruptcy.
"On the one hand, from a corporate governance perspective, it
appears they're being extra cautious and careful," said Frank
Partnoy, a former banker who is now a professor of law and finance
at the University of San Diego School of Law. "On the other hand,
it's a slap in the face to the taxpayer and the government."
For its part, A.I.G. has seized on the significance and
complexity of the case, which is filed in New York and Washington. A
U.S District Court judge in New York dismissed the case, while the
Washington court allowed it to proceed.
"The A.I.G. board of directors takes its fiduciary duties and
business judgment responsibilities seriously," said Jon Diat, an
A.I.G. spokesman.
On Wednesday, the case will command the spotlight for several
hours at A.I.G.'s New York headquarters.
Mr. Greenberg's company, Starr International, will begin with a
45-minute presentation to the board, according to people briefed on
