But for the deal to be legitimate, the provider of reinsurance, in this case AIG, must take on risk. Regulators say the $500 million premium transfer to AIG indicates that the deal may have involved little or no risk and therefore should not have been accounted for as an insurance deal.
Greenberg, forced out by his board as the reinsurance probe intensified, reportedly has said he believed AIG was taking on $600 million in potential liabilities, which would mean the deal involved at least $100 million of risk for AIG.
Warren E. Buffett makes his way past reporters as he leaves yesterday's meeting, during which he was questioned about a transaction between AIG and General Re Corp.
(Chip East -- Reuters)
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In return for the deal, sources say General Re received a $5 million fee. But sources say the fee was provided in a fashion that could have been intended to mislead regulators about the nature of the transaction.
In a television appearance Sunday on ABC, Spitzer said that he had amassed evidence of wrongdoing by Greenberg and that he hopes to reach a settlement with AIG over accounting manipulations that could reduce its net worth by more than $1.7 billion. The company's board has hired outside lawyers to investigate its books and provide regular updates to Spitzer and the SEC.
Spitzer once again reiterated during the Sunday interview that Buffett is a cooperating witness and not a subject of the insurance probe. But other regulatory sources have said discrepancies remain between Buffett's account of his knowledge of the AIG deal and the account given to investigators by former General Re chief executive Ronald E. Ferguson.
One regulatory source said Ferguson has testified that he gave Buffett detailed information on the AIG transaction. Ferguson, who remains a consultant to General Re, did not return a call for comment on Monday. Sources said Buffett was asked about Ferguson's testimony during the interview.
Greenberg, 79, has been unable to prepare for his testimony because he lacks access to key documents that cover insurance deals that run back two decades, defense attorney David Boies said in a prepared statement.
"I am willing to accept responsibility and to account for the performance of my duties, but I believe that good order and fairness require that I have an adequate opportunity to be advised of the issues to be investigated and to my alleged involvement therein," Greenberg said in the statement.
Spitzer had rejected a request from Greenberg's lawyers to postpone the questioning, which will take place in Spitzer's Manhattan office with Greenberg under oath.
Greenberg did not address his involvement in the specific transactions under government scrutiny in the written statement yesterday. But he did say in the statement that as the company's chief executive for nearly four decades, he was "generally in charge of the overall conduct of the business."
"I was familiar with many, but certainly not all, or even a significant percentage of, the literally millions of transactions each year in approximately 130 countries," Greenberg said. "I made many decisions and approved many decisions by many colleagues. In many cases, I made general decisions which were then implemented by others without my involvement. Many other decisions and actions were taken by others in the company without my participation."
Christopher Winans, a spokesman for AIG, declined to comment on Greenberg's decision to invoke the Fifth Amendment. "We're all about cooperating, and we're continuing on that path," he said.
Sources said the tone of the interview with Buffett was generally cordial and that Buffett was charming and forthcoming in his answers.
White reported from New York. Johnson reported from Washington.
