Spitzer and AIG: three years later

In August 2005, I summarized the state of play on Spitzer vs. AIG, which led to a massive accounting restatement by AIG's board and the departure of Hank Greenberg, AIG’s longtime and highly successful CEO, to ward off a possible crushing indictment of the company:

Greenberg was the last of the imperial CEOs, and the whole Starr International setup did not seem designed for transparency or governance discipline. But history will probably demonstrate that AIG was better off with him in charge, or trusting to corporate governance processes to replace him, than with Spitzer's political maneuvering. In other words, the price tag on the costliest governor election campaign in history is mounting.

Of course we know what happened to Spitzer. Greenberg, who is still an AIG shareholder, is suing AIG over the restatement. As a result of Greenberg's departure, or the accounting restatement, or both (I suspect mainly the former), AIG is not doing so well. As today’s WSJ comments:

A careful and lengthy look at the evidence available so far . . . suggests that the AIG case, like so many others that Mr. Spitzer brought, was an example of prosecutorial excess. Instead of uncovering some great fraud by a titan of industry, its main result has been to damage the company, and harm innocent managers and shareholders. * * *Trading above $72 in February 2005 before it was Spitzerized, AIG shares closed yesterday at $39.57. The company's directors defend themselves by saying Mr. Spitzer gave them little choice but to dismiss Mr. Greenberg. Whether that was true at the time, they – and Mr. Spitzer – owe an apology to AIG shareholders.