Friday, 30 January 2009

AIG in the spotlight again

US insurance company, AIG, one of the high profile victims of the credit crunch, is in the spotlight again with one of its former vice presidents being jailed for four years for falsely inflating the company's share price and reserves.

According to reports, Christian Milton, who was convicted back in 2008 of conspiracy, mail fraud, securities fraud and making false statements to the Securities and Exchange Commission, participated in a scheme whereby AIG "secretly paid" General Reinsurance to take out reinsurance policies with the company in 2000 and 2001. The scheme reportedly cost investors up to $597 million.

It is not the first time that AIG has been implicated in fraud. According to Wikipedia, an accounting scandal resulted in former CEO Maurice R. Greenberg being ousted in 2005. The allegations made at the time included fraudulent business practice, securities fraud, common law fraud, and other violations of insurance and securities laws. All criminal charges were later dropped however and Greenberg was not held responsible.

AIG, and other victims of the credit crunch are also being investigated by the FBI. The investigation is believed to be looking at whether these firms unduly influenced agencies to "inflate" their ratings and misled investors about the true state of their assets.