Date registered: Aug 2002
Vehicle: 2021 SL770
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Despite Attacks, Business as Usual at AIG
(Washington Post) Insurance giant AIG, which last month received a multi-billion-dollar aid package from the government, is still reeling from political attacks about the lavish, week-long retreat taken last month by executives with the company's chief insurance subsidiary.
The company says the retreat is misunderstood, and that it plans to go ahead with similar events as scheduled this fall.
At last night's presidential debate, Sen. Barack Obama, the Democratic nominee, said AIG executives who went on the trip "should be fired" and that the U.S. Treasury should be reimbursed. Today, White House press secretary Dana Perino called the getaway "pretty despicable."
The brouhaha started yesterday during testimony in front of the House Oversight and Government Reform Committee when lawmakers questioned the spending last month by AIG's main insurance subsidiary, AIG American General, at the St. Regis resort in Monarch Beach, Calif. Executives spent $443,000 on hotel rooms, restaurant tabs, golf and spa visits during the retreat -- just a few days after the federal government rolled out an $85 billion emergency loan for American General's troubled parent company.
After yesterday's hearing, AIG's new CEO, Edward M. Liddy, sent a letter to Treasury Secretary Henry M. Paulson saying that the retreat was a pre-planned event for a top-producing subsidiary. Only 10 AIG employees attended the event and no AIG executives from its New York headquarters were invited.
In his letter, Liddy wrote "that we owe our employees and the American public new standards and approaches," assuring Paulson that the company is "reevaluating the costs of all aspects of our operations in light of the new circumstances in which we are all operating."
Nicholas J. Ashooh, a spokesman for AIG, tells The Post's Investigations blog that the subsidiaries attending previously scheduled retreats and conferences are "making money," Ashooh said.
"These are self-sustaining companies and we're conducting normal business," he said. "These events are happening all the time. We're maintaining these subsidiaries to keep them going so that, in one aspect, we might sell them to pay back the Fed."
"I'm not surprised that people are reacting strongly to it," Ashooh added, referring to the St. Regis expenses. "But the reports are just plain wrong."
Ashooh said several AIG firms are going ahead with social and business events that had been scheduled before the bailout.
One of AIG's main securities subsidiaries, Atlanta-based FSC Corp., is holding its annual National Education and Business Conference at Atlanta's Marriott Marquis hotel next week. At least 400 stockbrokers and their families are expected to attend the three-day conference, with FSC expected to pick up the tab for airfare, rooms and bar and restaurant charges.
[Addition: John Pluhowski, a spokesman for AIG Retirement Services, said today that attendees are expected to pay a "portion" of their transportation, room and related expenses. It is unclear what part they are expected to pay for.]
Later this month, an estimated 150 brokers and 50 AIG employees are planning to attend a get-together for the company's high-end insurance "private-client group" at the Ritz Carlton in Half Moon Bay, Calif.
"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon