AIG billion dollar suit sees ex-ceo testify he took $20 billion in AIG stock to Bermuda

The former head of ailing U.S. insurance giant AIG told a court on Wednesday that he had a private jet fly a large block of the company’s stock to Bermuda from New York to prevent AIG from seizing it.

“It was a reaction to the entire environment that was emerging between AIG and Starr International,” Maurice “Hank” Greenberg told U.S. District Judge Jed Rakoff. “It was starting to get very ugly.”

A key witness in the dispute between Starr International and American International Group (AIG.N), Greenberg appeared peevish under questioning by the lawyer for his former company, Ted Wells.

Greenberg also admitted to being “angry” at suddenly losing his job at the company that he had built into the world’s largest insurer.

“Yes. It was sudden and abrupt….Yes I was angry,” he told Wells when asked about his ouster.

AIG is suing Starr International for $4.3 billion in damages representing the sale of millions of AIG shares since Greenberg left the insurer and the return of more than 185 million AIG shares that Starr International controls.

AIG accuses Greenberg, chairman of the privately held, Bermuda-based Starr, of illegally taking the stock, worth at one point at least $20 billion, in 2005.

AIG contends the shares were pledged to fund a deferred compensation plan for selected employees. Starr disputes that saying the beneficiary of the shares was always a charitable trust.

Wells told Judge Rakoff that a private jet was flown from Bermuda to New York in late September 2005 so that Starr representatives, accompanied by bodyguards, could transfer the shares to accounts in Bermuda.

“If they attached (or seized the stock by court order) we would be spending our time in additional lawsuits,” Greenberg said.


A WSJ Law Blog recap

It’s hard to know exactly whom to focus on on any given day in the AIG/Starr trial, which is about to start its third day. Earlier in the week, it was all about the opening arguments of the superstar courtroom lawyers, Paul Weiss’s Ted Wells, representing AIG, and Boies Schiller’s David Boies, handling the work for Starr. (Click here for a nice recap of the opening statements earlier in the week from the American Lawyer’s Andrew Longstreth.)

On Tuesday, it was former AIG chief Maurice “Hank” Greenberg (pictured) who stole the spotlight.

The backdrop: AIG is trying to wrest away control of more than $4.3 billion from Starr, for the money Starr got from selling off tens of millions of AIG shares in recent years, as well as 185 million AIG shares Starr has held for years. AIG says the shares were supposed to be used to compensate AIG employees, as they were for decades when AIG and Starr were sister companies. Starr argues it could use the shares as it wished, and it has invested much of the money it earned from share sales in recent years.