Santa Monica, CA — Former AIG insurance executive Maurice Greenberg, who was ousted because of accounting manipulations and misrepresentations, runs the foundation that funded a report released today that would weaken the post-Enron corporate governance and accounting standards that helped uncover AIG‘s misconduct.
Earlier this year, AIG acknowledged intentionally misleading regulators, investors and policyholders and agreed to pay $1.6 billion in reparations to settle a suit brought by New York Attorney General Eliot Spitzer. The company also restated its earnings by more than $3 billion. A civil suit accusing Greenberg of fraud and other sham accounting maneuvers is still pending. The charges include false transfers of reserves and the creation of offshore entities to prop up AIG‘s performance.
“The power given to prosecutors and the personal responsibility of CEOs created under Sarbanes-Oxley were key contributors to Greenberg’s ouster from AIG,” said Carmen Balber at the Foundation for Taxpayer and Consumer Rights. “This proposal is an attack by a discredited CEO against the corporate governance laws that ended his 37 year reign at the helm of AIG.”
USA Today reported the study was funded by the Starr Foundation, which was established by the founder of AIG and is now chaired by Maurice Greenberg.
The committee’s proposals would undermine existing investor and consumer protections. They include:
— Substantially diminished shareholder rights, such as a proposal to eliminate shareholder class-action lawsuits before a jury, replacing them with arbitration or non-jury trials.
— Give federal regulators precedence in enforcement matters, effectively curtailing activities by states attorneys general, like Eliot Spitzer in New York.
— Not hold directors responsible for corporate malfeasance.
— Limit an accounting firm’s liability if they certify false financial information enabling corporate executives to cheat their shareholders and the public.
— Weaken accounting requirements concerning what information must be reported as having an impact on financial statements and loosen the standard by defining it related to annual statements rather than interim ones.
“Corporate CEOs are using the cover of academia to lobby for less accountability to American shareholders while corporate scandals continue to fleece the public,” said Balber. “We should be looking for ways to strengthen our investor protections, not throwing them back to the wolves.”
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The Foundation for Taxpayer and Consumer Rights is California’s leading non-profit and non-partisan consumer watchdog group. For more information visit us on the web at: http://www.ConsumerWatchdog.org