Attorney General Richard Blumenthal and the co-chairmen of the legislature’s Banks Committee issued subpoenas Friday afternoon to a dozen American International Group executives, including CEO Edward Liddy, asking them to come testify at the state Capitol next week.
Blumenthal, along with Rep. Ryan Barry, D-Manchester, and Sen. Bob Duff, D-Norwalk, said the insurance company whose financial products division is headquartered in Wilton, Conn. is potentially misusing the state’s laws in order to justify paying out $165 million in taxpayer funded bonuses.
Blumenthal said his office is prepared to enforce the legislative subpoenas if the dozen AIG executives, who all reside in Connecticut, refuse to come and testify Thursday, March 26.
Earlier in the day Friday Blumenthal said AIG had complied with his initial subpoena for all the documents related to the bonuses, including a list of bonuses and the names and addresses of those who received them. It’s unlikely the names and addresses of those receiving bonuses will be made available to Connecticut because of the state’s Freedom of Information laws, which would force officials to make those names public, Blumenthal said. A list has been provided to the state of New York and Congress.
The documents made available Friday will enable the Banks Committee to asked more forceful and probing questions than those asked of Liddy by Congress, Blumenthal said.
By the end of the day Friday after Blumenthal had a chance to review some of the documents his office received, he sent out a statement saying, “We have confirmed that AIG—deluded and distracted by a broken corporate culture—has wildly misused federal bailout money. AIG’s own documents reveal that it turned an emergency bailout into a meritless handout, paying windfalls to employees as reward for financial failure.”
Blumenthal said he has been in touch with AIG’s attorney’s and they’ve indicated they want to be cooperative with the legislative subpoena.
However, if they are not, “we are prepared to enforce the subpoenas,” Blumenthal said.
“Our intention is to get to the bottom of this story and ask very direct questions about why these bonuses were given, when they were ordered, and why they’re using a vague Connecticut law to justify their actions,” Duff said.
He said the Banks Committee has been holding hearings for more than two years on things like subprime mortgages and consumer credit issues.
“Surges in foreclosures have not just been caused by people getting in over their heads, or caused by unscrupulous lenders,” Ryan said. “At the very top of the financial services food chain billions of dollars are being manipulated in ways that seriously disrupted the market.”
AIG added a veneer of respectability to these loans, Ryan said. “They made lousy investments look like good investments and helped create this warped market that ended in disaster,” he said. “AIG was grabbing the commissions of today and ignoring the defaults coming tomorrow.”
“AIG employees have a moral and legal obligation to appear at this legislative hearing and disclose details about corporate compensation to employees, as well as investment decisions by AIG Financial Products Corporation involving credit derivatives and dealings that have led to market destruction,” Blumenthal said.
The subpoena asks the following AIG employees to come testify next week:
AIG CEO Edward Liddy
James Haas of Fairfield
Jonathan Liebergall of New Canaan
Douglas Polling of Fairfield
Christopher Phole of New Canaan
Steven Pike of Stamford
Robert Powell of Westport
Joseph Rooney of Fairfield
Gregory Ruffa of Darien
Leonid Shekhtnam of Redding
Christian Toft of Weston
Steven Wagar of Norwalk