AIGs Pine Street headquarters in New York. (AFP)
New York, March 24: The New York state attorney general, Andrew M. Cuomo, said yesterday that he had persuaded nine of the top 10 bonus recipients at the American International Group to give the money back, as the Senate retreated on plans to tax such bonuses.
Cuomo said he was working his way down a list of AIG employees, ranked by the size of their bonuses, and had already won commitments to pay back $50 million out of the total $165 million awarded this month. But in a reversal of the stand he took last week, he said he did not intend to release any names.
If the person returns the money, I dont think theres a public interest in releasing the names, Cuomo said in a conference call with reporters.
In Washington, the Senate majority leader, Harry Reid, said that efforts to recover bonuses like the ones at AIG through punitive taxes would be delayed. Other officials said momentum in Congress had slowed considerably, given misgivings voiced by President Obama.
Cuomo said that he hoped eventually to recover $80 million in bonuses paid in March to AIG employees in the US. But he said an additional $85 million had gone to people outside the US, and he did not believe his office had the legal standing to pursue them.
That would appear to spare people in AIGs financial products office in London, the seat of the companys business in credit-default swaps the derivatives that nearly sank the company and paralysed the global financial system. We have a very aggressive theory about our jurisdiction, but we dont have a theory that gets us to London, Cuomo said.
However, a person with knowledge of the investigation, who spoke on the condition of anonymity, said that two recipients in the London office had returned their bonuses voluntarily.
Cuomo said that of the top 20 recipients in the US, 15 had returned their payments in full. The rest included people who refused, who were still reviewing their options or who had not yet been located, he said.
A spokeswoman for AIG, Christina Pretto, confirmed that employees had been agreeing to give back their bonuses, and said there had also been a handful of senior-level resignations. She said the company expected more resignations.
This bore out the predictions of AIGs chief executive, Edward M. Liddy, that if employees had to give back their bonuses, they would probably resign. In remarks to a House Financial Services sub-committee last week, Liddy expressed concern that such resignations would make it harder for AIG to wind down its portfolio of derivatives, currently worth $1.6 trillion. The company wants to minimise losses while exiting the derivatives business.
Pretto said the company thought so far that the situation was manageable.
On the same day Liddy spoke, lawmakers began rushing to impose heavy taxes on bonuses paid to executives of companies receiving federal support. The House on Thursday voted overwhelmingly in favour of a near total tax on such bonuses.
But after complaining last week that Republicans were blocking a similar bill in the Senate, Reid, Democrat of Nevada, indicated yesterday that any action would be delayed. Republicans have asked for more time to study the legislation, and theyre entitled to that, Reid said as he opened the Senate yesterday afternoon.
NEW YORK TIMES NEWS SERVICE