Greenberg: 'I was angry' about losing AIG CEO job

NEW YORK (AP) -- Former American International Group Inc. CEO Maurice "Hank" Greenberg acknowledged on Wednesday he was angry about losing his job in 2005, but defended taking over a retirement bonus fund that AIG is trying to recover in federal court.

"Yes, I was angry," said Greenberg, responding to a question from AIG's lawyer Theodore Wells.

Wells argued earlier this week that Greenberg, through his private firm Starr International, raided an AIG retirement program holding $4.3 billion in stock because he was mad about getting ousted in March 2005.

Greenberg, 84, built AIG over 35 years from a small insurer into the world's largest but was forced to retire amid investigations of accounting irregularities. Starr, the company that controlled the retirement fund in question since its creation, remained AIG's largest shareholder until the government bailed out the insurer last year.

Greenberg and Starr's lawyers are arguing that the shares belonged to Starr.

In July 2005, at the same time Greenberg stepped down as chairman of AIG, Greenberg and Starr's other voting shareholders restated the purpose of the fund. In a memo that Wells presented in court on Wednesday, Starr's shareholders said they rescinded previously stated purposes of the fund and reaffirmed the fund's "ultimate purpose" as a charitable trust.

Wells asked Greenberg on Wednesday if he informed the hundreds of retirement plan participants of the fund's restated purpose.

"I don't think we had an obligation to tell them that," Greenberg said.

Wells also played a video of Greenberg in 2000 telling retirement plan participants at the time that there were "sufficient shares in the trust for a couple hundred of years."

"It's a motivating speech," Greenberg told jurors. He said the participants in attendance would have known that "a couple hundred years is an exaggeration, obviously."

"No company can plan 200 years in advance," he said. "You're lucky if you can plan five years in advance."

Greenberg appeared mostly solemn and composed during Wells' examination, but he raised his voice when Wells brought up "a couple hundred years" again: "It was a figure of speech," Greenberg said, leaning forward in his chair.

The lawsuit against Greenberg and Starr involves an unusual fund established during a reorganization of AIG in 1970 with $110 million worth of stock. Its value grew to $4.3 billion over nearly four decades.

The fund was described in letters and speeches by Greenberg before 2005 as a retirement bonus fund for select current and future employees -- a "kind of golden handcuffs" given to members of "the inner club." The plan was so uniquely structured that Greenberg said in a 2000 speech that "if we tried to do it today, it would be impossible because of the tax laws."

Starr International Co., also known as SICO, is a Bermuda-based holding company.

Wells also brought up on Wednesday Starr's decision in 2005 to move the stock in question to Bermuda from a JPMorgan Chase account in the United States.

Wells asked Greenberg if the decision was his idea, and Greenberg responded, "I don't recall."

After dismissing the jury for the day, U.S. District Judge Jed S. Rakoff asked Greenberg the reason behind the decision to move the stock out of the country to Bermuda. After some vague responses, Rakoff asked Greenberg if his fear was that somebody would "attach" the stock. "Attachment" is a legal procedure where someone seizes property.

"Yes, it was," Greenberg finally answered.

Greenberg has been arguing since Tuesday that his descriptions of the plan to participants were loose, not legalistic, and that plans can change. He also said the fund was "not just for AIG employees," and that it had other purposes. One was to allow Starr to control AIG, Greenberg said, and after Greenberg lost his job, Starr's voting shareholders "lost control" of AIG, and were then able to reclaim the shares.

The civil trial that began in Manhattan on Monday is expected to last as long as a month. Greenberg will take the stand again on Thursday.

The troubled insurer AIG has received $182 billion in federal aid since late last year. AIG said if can reclaim the $4.3 billion from Starr, the money would help it pay back the government.