<In Bermuda last Friday, a lawyer for American International Group Inc. Chairman Maurice "Hank" Greenberg carted boxes of documents out of an AIG office and into a van, according to people familiar with the situation.
The next day, lawyers hired by the big insurer to handle a regulatory probe discovered certain records were missing, these people say. Then another jolt: They also learned that an AIG employee had destroyed some computer records and tape recordings of business meetings. There was a confrontation between the lawyers for AIG and their counterparts representing Mr. Greenberg over who should secure the rest of the documents.
The showdown set in motion a frantic 48 hours that ended Monday with Mr. Greenberg's abrupt resignation as AIG's longtime chairman. Before it had ended, New York Attorney General Eliot Spitzer told AIG lawyers he was dismayed over what he called the "document caper," according to people familiar with the matter.
"As long as Hank's still the chairman, AIG is still accountable," Mr. Spitzer told AIG's outside lawyers on the phone Saturday night from his Colorado skiing vacation, these people say. "You have serious criminal exposure." Then, according to these people, Mr. Spitzer issued the ultimate threat: His office would indict AIG on Monday if action wasn't taken.
No financial firm has ever survived a corporate indictment. Some of AIG's independent directors argued Mr. Greenberg had to go immediately in order to protect the company, according to those familiar with the situation. They had essentially already taken control of the company because of the sweeping regulatory probe into whether AIG bolstered its financial condition with improper accounting.>
Later, during a 10 hour board meeting that Greenberg periodically phoned in on, he told the board at one point:
"You couldn't even spell the word insurance,"
Does anybody think Spitzer exercised too much power here? Not me. Is he supposed to sit back while the CEO of a public company has records destroyed? Somebody had to slap the AIG board out of its stupor. <<