Report: AIG papers doctored

General Re, a unit of Berkshire Hathaway, altered records of a transaction with AIG, the New York Times reports.

Associated Press
Published April 9, 2005

NEW YORK - Documents for a reinsurance transaction that is at the center of federal and state inquiries into American International Group Inc. were doctored several months after the deal was struck, the New York Times reported Friday.

The New York Times, quoting unidentified "executives with direct knowledge of the transaction," said the deal was "repapered" by midlevel employees of General Re, a unit of Berkshire Hathaway.

The paper said the modification was detected by Berkshire Hathaway-hired lawyers doing an audit of General Re in connection with an unrelated case.

The Securities and Exchange Commission and New York Attorney General Eliot Spitzer are investigating the transaction, which occurred in the last quarter of 2000 and the first quarter of 2001, to determine if AIG booked the deal to burnish its books.

AIG recently admitted accounting for the deal was improper.

The former chief executive of AIG, Maurice "Hank" Greenberg, is to speak with regulators in New York on Tuesday. Billionaire investor Warren Buffett, who heads Berkshire Hathaway, will speak with regulators the day before.

Buffett is considered "a cooperating witness" and not a target of the inquiry, investigators told the Associated Press.

Greenberg was forced out as head of AIG in mid March as allegations of accounting improprieties at the company mounted.

The New York Times said the reinsurance transaction being investigated was initiated by Greenberg with Ronald Ferguson, former head of General Re.

Two General Re executives handled details with Christian Milton, who recently was fired by AIG for failing to cooperate with investigators, the newspaper said. The executives then passed on responsibility to John Houldsworth, head of General Re's office in Dublin.

AIG initially paid General Re $5-million for services. After the "repapering," the documents made it appear that General Re paid $10-million to AIG.

Thursday, federal regulators secured a court order compelling AIG, Greenberg and a private company with AIG ties to preserve and turn over documents.

An official of the SEC said the agency sought the order from the U.S. District Court in Manhattan in response to reports of documents having been removed from an AIG building in Bermuda, where the company has a subsidiary, or destroyed.

AIG, Greenberg and C.V. Starr & Co. Inc. consented to the order, the agency said.