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...and Spitzer on AIG's Starr Foundation

Tom Kirkendall on the New York AG's charges that Hank Greenberg and other American International Group execs engaged in improper transactions 35 years ago at the expense of the foundation long associated with AIG:

Well now, those are serious charges. But a couple of small details were left out of Spitzer's typically boisterous media release on the salacious new charges. First, the Internal Revenue Service, a New York state court and the New York attorney general's office had previously approved the transactions that Spitzer now characterizes as improper "self-dealing."...

In total, Spitzer contends that if the lost funds had remained invested invested in AIG shares that they would now be worth more than $6 billion. ...[a]little detail that Spitzer failed to mention is that the $6 billion in value to which Spitzer refers is largely attributable to Greenberg's 35 year management of AIG, which Spitzer unceremoniously ended earlier this year.

Not only did "the Internal Revenue Service, a New York court and the New York attorney general's office all [approve] the Starr estate's transactions to which Spitzer now complains," says Kirkendall, but

Greenberg and the other directors point out that Mr. Starr himself set up and approved the transactions before his death, and that the transactions allowed the Starr Foundation to amass assets of more than $3 billion today, not including about $2 billion in donations disbursed over the years.

In yesterday's dead-tree edition of the New York Times, Gretchen Morgenson's article on the controversy did not mention until after the jump that the transactions had been approved by the IRS and Spitzer's own predecessor at the time. More: W$J editorial on the subject.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.