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AIG Execs: We're Being Extorted!
No really, AIG Financial Products chief Gerry Pasciucco told a meeting of his European based derivatives gurus that the money vortex CEO Ed Liddy's request that they return their bonuses amounted to "blackmail." That's according to a London-based recipient of one of the bonuses -- London, you'll recall, is where the inimitable Joseph Cassano was employed -- who furnished the news agency with emails showing that AIG compliance officer David Haig had actually asked the country's Serious Organised Crime Agency to probe whether the (voluntary) requests could be legally considered extortion. Well what a fascinating use of government-bankrolled hours for the taxpayers of both countries!! But wait, don't shoot yourself, hear the anonymous employee out...
"The vast majority of people in London have made the decision that the request is pretty offensive," the employee said. "It effectively constitutes blackmail whether it is criminal or not. There is no moral reason to give it back."Hmmmm. Okay, well, let's reflect on this for a second. An insurance company doles out a couple hundred million dollars to hold on to employees who merely by leaving the company could, by some obscure provisions of the wholly unregulated contracts said company made with approximately 97% of financial institutions known to man, require -- by the Godly covenant of contract law -- said company to owe said banks more money than probably even exists in the world... and the federal government that was forced to buy the company to appease the banks lest they usher in Armageddon, makes a wholly voluntary request to said employees, $180 billion into its effort, to return their bonuses to appease taxpayers...and yes I suppose under that sort of a system such a request just might sound like "extortion." Legal or not.
Josh
Zachary
These AIGFP executives are completely out of control and consumed by vengeance, greed, arrogance and irrationality. The types who would run over their own mothers for a buck. Oh wait... that's effectively what they did.
It is rather hard to believe that this is part of a well-thought out public relations campaign to save their image.
And aren't they being investigated by the Serious Fraud Office themselves? This makes me think they may have captured that agency...
March 26, 2009 1:26 PM | Reply | Permalink
Isn't AIG "extorting" US citizens now that we own +35% of this POS Company.
March 26, 2009 1:26 PM | Reply | Permalink
My mistake. SFA is not SOCA. Thus, they may have captured the British Government just as they have captured ours.
March 26, 2009 1:33 PM | Reply | Permalink
If a company is bought, is it not Standar Operating Procedure to reevaluate all the contracts? What guarantee does the employee have that their prior employer's contracts will be maintained? I do not think there are any, although companies will renegotiate simply to create good faith, but is there some law that says they have to honor ALL contracts of a company once it is purchased. Any legal eagles want to respond?
March 26, 2009 1:43 PM | Reply | Permalink
These executives sure as hell weren't working for a $1 salary BEFORE the renegotiation.
There are no less than three communications from Liddy since October endorsing the retention payments ... and now he's shocked ... SHOCKED to learn of them. And do you honestly believe that Elijah Cummings was the only person in congress to know about the arrangement?
March 26, 2009 2:58 PM | Reply | Permalink
Well, let's consider this:
- the bailout money for AIG is not a gift. It's a loan. As far as I know, AIG has been making monthly payments to US on that loan.
- the bonuses (right or wrong) are legal, negotiated, part of the contract and confirmed by AIG management on several occassions
- the bonuses are part of the bill that was passed by the Congress and signed by the president
- voluntary is voluntary, unless of course it's not. From the article Mo links to: "Some AIG employees have said they have a tough choice to either give back bonuses they believe they earned lawfully or face the possibility that their names could be made public by Cuomo, who has been investigating about $165 million in retention pay awarded by the company."
Oh, and a minor detail that Mo predictably leaves out:
"The employee at the meeting said Pasciucco recommended that bonus recipients strongly consider returning the money but said any decision to do so was an individual choice."
Of course it goes without saying that the choice to use the word "extortion" (which is not found in any of the quotes) was clearly taken by Mo voluntarily.
Keep the flame, brother, you're making Access Hollywood really proud.
March 26, 2009 2:17 PM | Reply | Permalink
Just wait till you figure out who "brother" Moe actually is.
March 26, 2009 2:25 PM | Reply | Permalink
Unless you've read the contracts you are assuming a lot. Nothing remains 'legally fair' if in so doing it caused major harm to the entire nation. Like saying these German captains deserve their sign up bonuses inspite of killing all these people at this institution because their contracts state...I mean your interpretation is legaleze justification for more greed. Millions have lost out from this company's actions so get over it. When they get back their pensions then we'll talk bonuses. Pretend aliens landed and blew up your employer and then flew off again...as long as tax payers are paying out...then forget the bonuses unless you can come up with a way to restore the 401k your co gambled away.
March 26, 2009 7:44 PM | Reply | Permalink
What, exactly, was AIG's fraud? The fraudsters, if that's what they are, were two steps ahead of government the whole time.
Memo to Congress: it's your job to regulate corporations, to keep them from harming citizens. Our laws permit the creation of corporations, protects their shareholders and operators from personal liability if the company fails, but corporations have to obey the law. -- Except ideologues in government claimed that corporations were regulated by markets, not governments, and there was no law to keep AIG from selling those insurance substitutes. Guess what, jackasses!
This financial disaster was a result of your failure to do your job.
March 26, 2009 3:05 PM | Reply | Permalink
Icarus is probably right. However, I suspect that Eliot Spitzer's NY AG unit would have been able to locate actionable fraud on the part of AIG and I believe he may have said so in a Slate column he recently wrote. The marketing of the securities with AAA ratings is probably where the fraud lies and it probably involves concerted action with the credit rating agencies. However, Obama did say that what they did was perfectly legal.
March 26, 2009 3:33 PM | Reply | Permalink
You could buy some commercial time and just run these guys' comments unedited, and the bonus tax would probably be passed in two weeks.
March 26, 2009 3:35 PM | Reply | Permalink
Just what kind of world do we live in where the names of officers and top managers of a company are classified information, unavailable even to shareholders?
March 26, 2009 3:43 PM | Reply | Permalink
I saw in some other comments a description of the 'retention bonus' and how it wasn't really a 'bonus' at all, but was instead money paid to an employee at the end of an agreed upon term if the employee completed that term.
So let me see if I understand this... A person makes an agreement with a company to work for a year but the company knows enough about that person and their ilk that they don't give them any money until that year is finished. As a matter of fact, this end of term payment is pretty much all they'll get. So, the company seems to know that if they paid the agreed-upon amount in weekly or monthly installments or, god forbid, up front, they can expect that employee to bail on the 'work for a year' agreement. And the employees, from comments I've read on this site, seem to accept this as the truth.
So, these people need to be bribed or manipulated in order to get them to keep their word? If they agreed to work for some period of time but they leave if they have enough cash in their hand or a better offer comes along, then they are just about the biggest scumbags on the planet. The fact that discouraging this eventuality has to be built into their compensation package seems to prove that point.
If your employer can't trust you to do your job if you've already been paid, then you are a scumbag.
If an entire industry has to use this special compensation arrangement because that's just 'how it works', then everyone who works in that industry is a scumbag.
March 26, 2009 5:42 PM | Reply | Permalink
These idiots better get it straight...once tax payers money got involved bonuses went out the window or bail out the company with your bonuses.
Many, many, many collapsed bankrupted companies went down without being able to pay their employees all they deserved. Your personal livelihood is out matched by the economic livelihood of millions of workers who now have lost their pensions because of your companie's antics.
Like Nazi soldiers who stopped getting their sign up bonuses, realize the defeat of your claims. When my brother gets back his $90k he lost in his 401k saved for retirement...when he gets his back and the millions like him who lost it all because of the company you work for...file for unemployment...that's the government's bonus for you you greedy self centered selfish bastards.
Not a one of you is starving or losing your home or suffering any of the consequences for your companies' actions. Fairness would be if we took everything anyone who worked for the company gained and divided it up among those who lost all. Get your so called bonuses from the billions your company manipulated from the pensions they were betting with or take the loss like the rest of us. But bailing you out with our tax dollars still doesn't get back our pensions so STFU. Or join Graham's "whiners".
March 26, 2009 7:35 PM | Reply | Permalink
Any thoughts on paying these bonuses/retention payments/salaries in AIG stock valued above market price in the way they valued the derivatives they sold.
March 27, 2009 8:59 AM | Reply | Permalink
This is nonsense. Eliot Spitzer is in fact resposible for the crash of AIG- see STONEzone.com
The idea of former New York Governor and Attorney General Eliot Spitzer criticizing the AIG bailout and bonus in a recent column for SLATE is ironic: Spitzer is responsible for the economic condition of the company for which they need a bailout.
In fact, Spitzer's crackdown on Wall Street caused the firms to increase leverage because he took away the ability for them to make money in research and underwriting, and they looked for other ways to make money-like securitizing subprime mortgages.
In fact, if Spitzer hadn't removed Maurice "Hank" Greenberg from AIG, the company would never have crashed. Greenberg was a much more conservative investor and had tighter risk management rules that were suspended by the company only after Spitzer drove Greenberg out over charges that proved bogus in the courts.
The billion dollar investment in credit default swaps which were not hedged brought the company and the economy down. This insurance was written only after Greenberg was forced out and never would have been written under Greenberg's risk management rules. Thus, Eliot Spitzer is partially responsible for the current economic crisis, not some Boy Scout crying an early warning.
This is so typical of his reign as Attorney General where he blackmailed companies by press release, threatening to destroy your company's value unless you pled to infractions you hadn't actually committed. Most saw the futility of winning in court after Spitzer had destroyed their company so they settled. When cases actually went to trial most were dismissed or those Spitzer apprehended were acquitted.
Spitzer's assault on the New York Stock Exchange's Ken Grasso, Ken Langone and Greenberg, while not also pursuing NYSE board member Carl McCall for fear of offending key African American political leaders, stands out as the kind of perverted justice Spitzer pursued. Spitzer made base-less charges against Greenberg, drove him from the company and set the stage for AIGs collapse.
Now, Spitzer criticizes the AIG -bail-out. Now that's chutzpah!
Roger Stone
March 27, 2009 11:13 AM | Reply | Permalink