Insurance executives gone wild!
AIG snagged billions while its execs hung out by the pool
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Last week, the U.S. Treasury announced it would double the taxpayer-funded bailout for troubled American insurer AIG. It has now committed an incredible US$152 billion—likely the largest-ever government rescue of a private firm. But that same week, instead of laying low and soberly reflecting on how their company got into such a mess, senior AIG executives were spotted frolicking poolside at a posh Phoenix resort by a local TV news crew.
This isn’t the first time AIG executives have been caught fiddling while their company burns. In September, just days after the U.S. government rescued AIG with its initial $85-billion loan, the company sent its top brass on a $440,000 retreat to a tony California resort. And after another $37.8-billion, taxpayer-funded in-fusion, AIG paid for an $86,000 English hunt. The latest seminar reportedly cost $343,000. This time—presumably to avoid detection—staff at the Pointe Hilton Squaw Peak Resort were instructed to post no company signs. “We can’t even say the word [AIG],” one hotel employee said.
When the news broke, the company swiftly went on the defensive. “It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services,” wrote spokesperson Nicholas J. Ashooh in a press release, adding that the company has been reimbursed for over 90 per cent of the cost by event sponsors and attendees. Ashooh also notes that company employees were directed to cut back last month, and since then more than 160 events have been cancelled.
Still, Ramy Elitzur, professor of financial analysis at the University of Toronto, is critical of AIG’s “business as usual” approach. “The optics are horrible,” he says. “It will come back to haunt them.” Elitzur predicts that things will change with Barack Obama in the White House. “The new chief of staff, Rahm Emanuel, worked as an investment banker. This guy will take no prisoners,” he says. “When they come to the new administrators, they’re going to get a swift kick in the butt.”