Greenberg, Still Battling for AIG, Turns 90
May 1, 2015 by James B. Stewart
To his accusers, Maurice R. Greenberg, also known as Hank, is just one in a line of disgraced chief executives from the mid-2000s who resorted to accounting fraud to pad their lavish bonuses. But even they have to admit one thing: The man has stamina.
Mr. Greenberg, who built A.I.G. into a global insurance colossus before being forced to resign in 2005, will turn 90 on Monday. The Council on Foreign Relations is observing the milestone with a dinner in his honor. He’ll also be celebrating at a lunch with his wife, Corinne, his four children, numerous grandchildren and other members of his extended family.
The accounting scandal that has shadowed Mr. Greenberg for the last decade also lives on. Mr. Greenberg expects to take the witness stand in July after years of discovery and procedural maneuvers in the civil fraud case originally filed by Eliot Spitzer when he was New York’s attorney general. Mr. Greenberg is also the driving force behind a four-year-old lawsuit claiming the federal government unconstitutionally seized A.I.G.’s assets during the financial crisis. Mr. Greenberg is pursuing $40 billion in damages in that case and, more important, public vindication for the company he spent a career building. Closing arguments were last week and a decision is expected this summer.
Many younger people have been worn down by the demands and distractions of far less protracted and contentious lawsuits, let alone two at the same time. And surely, few people would choose to spend their golden years surrounded by lawyers, facing subpoenas and hostile cross-examination. Yet, if anything, Mr. Greenberg seems to have been energized.
In the 10 years since he resigned from A.I.G. at age 80, Mr. Greenberg and a close circle of longtime colleagues have built the privately held C. V. Starr & Company from a small holding company with a handful of insurance agencies and employees into a global insurance company with over 3,000 employees. He also is a director of the Starr Foundation, which has bestowed over $2.2 billion in grants to New York charities alone. And in his spare time, he co-wrote a book, ”The AIG Story,” published in 2013.
Ed Matthews, president of Starr and a close colleague of Mr. Greenberg since they met in 1967, said: ”I can’t go so far as to say the lawsuits have invigorated him, but he was unjustly tarred and his reputation was besmirched. He’ll do everything possible to set the record straight.”
He’s also willing, and unlike most people, able to spend whatever it takes. His primary lawyer and adviser has been David Boies, the famed litigator and chairman of Boies, Schiller & Flexner. Mr. Boies and his firm represent Mr. Greenberg and Starr in the federal and state lawsuits and is also representing Mr. Greenberg in a defamation suit against Mr. Spitzer. Although Mr. Greenberg has said he lost 90 percent of his personal fortune, estimated by Forbes at $3.2 billion, when the value of A.I.G.’s shares collapsed in the financial crisis, he was granted about $200 million for legal expenses in a settlement with A.I.G.
Curious about the sources of his age-defying drive, I visited Mr. Greenberg this week at his Park Avenue office at the headquarters of the Starr Companies. Slight of stature, trim and impeccably dressed, Mr. Greenberg is a diet and fitness fanatic who could easily pass for 20 years younger.
”I have good genes,” Mr. Greenberg said, when I asked his secret. He said his great-grandmother died at 107 and ”had all her marbles.” But attributing his preternatural vigor to genes alone seems unduly modest. He mentioned that he played an hour of singles tennis the Sunday before we met and works out at least 45 minutes every day, including intense personal training sessions at Serious Strength, a fitness studio on the Upper West Side. He hikes (in Switzerland, where he and his wife have a house), cycles and was an avid downhill skier until recently. He said he gets six to seven hours of sleep a night, going to bed between 10 and 11 p.m. and rising at 5 a.m.
”Age doesn’t matter to me,” he said. ”No one is invincible, and I might not wake up tomorrow. But I don’t think about that. I’m doing what I want to do, and that’s what’s important.”
Added Mr. Matthews, ”Nothing is more important than Hank’s place in history.”
Much of that history is on display in Mr. Greenberg’s spacious corner office, which is lined with photographs of him with American presidents, cabinet officers and foreign leaders, many of whom Mr. Greenberg has outlived. Mr. Greenberg was especially close to Richard Nixon and Henry Kissinger (who will be at his birthday dinner) and had close relations with a succession of Chinese leaders (A.I.G. traces its roots to an insurance company founded by Cornelius Vander Starr in Shanghai in 1919). Mr. Greenberg succeeded Mr. Starr as chief executive in 1967 and took the company public. Before the financial crisis, A.I.G. was the largest insurance company in the world and reached a market capitalization of $242 billion in 2000.
That record of decades of nearly unmitigated success came to an abrupt end in early 2005, when Mr. Greenberg, during an earnings call, was asked a question about regulators, and commented they were turning ”foot faults into murder charges.” He didn’t mention Mr. Spitzer by name, but the aggressive New York attorney general was embroiled in an investigation of Mr. Greenberg’s son, Jeffrey, who had been the chief executive of Marsh & McLennan until he was forced to resign the year before. Mr. Spitzer fired back that Mr. Greenberg should be ”very, very careful” about what he called foot faults and issued a wave of subpoenas to A.I.G. and Mr. Greenberg. Mr. Spitzer publicly threatened to file criminal charges. Under the pressure of the investigation, Mr. Greenberg was forced to resign from A.I.G. in June 2005. (Whether A.I.G. would have come close to collapse in 2008 had Mr. Greenberg been allowed to stay remains an open question.)
”I couldn’t believe it,” Mr. Greenberg said of the accounting fraud suit. ”Spitzer went on television and accused me of criminal fraud. I was very depressed. I was told I could plead guilty, but to what? I did nothing improper. I would never admit I did something just to get out of litigation.”
Mr. Spitzer told me this week the claim that the lawsuit was retaliation against Mr. Greenberg ”is the most ridiculous assertion I’ve ever seen.” He added, ”The case is well documented and was brought to our office by established members of the business establishment.”
Standing on principle may be partly generational. Mr. Greenberg is one of a dwindling number of ”the Greatest Generation,” as Tom Brokaw called World War II veterans who grew up during the Depression and fought ”because it was the right thing to do.” Mr. Greenberg spent much of his childhood on a small farm in an impoverished area of the Catskills near Liberty, N.Y. His father died when he was 6, and his mother worked as a manicurist. At age 17, he dropped out of high school and lied about his age to enlist in the Army, where he learned ”discipline, focus and loyalty,” Mr. Brokaw wrote in his 1998 best seller.
”We were poor,” Mr. Greenberg said. ”We didn’t complain. We did what we had to do to survive. And we knew right from wrong. I’ve always believed that if you do something wrong, you should admit it. But if not, you fight for what you believe in.”
Mr. Spitzer never obtained the threatened indictment for criminal fraud, but the original complaint claimed that Mr. Greenberg and A.I.G. had engaged in elaborate accounting schemes, including sham transactions, to enhance the company’s balance sheet and mislead the investing public. Over the years, the original five causes of action and multiple counts have dwindled to two items. A New York appeals court recently ruled that those counts can go to trial this summer.
The state’s case for damages has also shrunk. It now claims that Mr. Greenberg should forfeit his bonuses from the relevant period ($40 million) and be barred for life from serving as an officer or director of a public company.
Although A.I.G. paid $1.64 billion in 2006 to settle the case (and acknowledged improper accounting practices) and Mr. Greenberg himself paid $15 million in 2009 to settle failure to supervise charges from the Securities and Exchange Commission, he hasn’t admitted to any wrongdoing. In a rare public comment on an S.E.C. settlement, he said he had ”no responsibility” for any fraud or accounting improprieties at A.I.G.
The case is now in the hands of its third New York attorney general, Eric Schneiderman. ”We look forward to proving at trial that Mr. Greenberg knowingly orchestrated two major frauds that led to his ouster in 2005, which were illegal and caused hundreds of millions — if not billions — in losses to A.I.G.’s shareholders,” said Matt Mittenthal, a spokesman for Mr. Schneiderman
Mr. Greenberg said the longevity of the case and the damage to his reputation have shaken, but by no means destroyed, his faith in the rule of law. ”There have been opportunities to settle over the years,” Mr. Boies said. ”His view is the case doesn’t have any merit and he’d rather fight than settle. He really believes in the American dream of being able to start with nothing, achieve great success and then give back. He believes it’s fundamentally unfair to target someone just because they’ve been successful.”
Mr. Greenberg insists that his mission is more than just personal vindication. ”If you believe the Constitution is being violated and you keep silent, then where is this country headed?” he said. ”You have to fight for what’s right.”
