Greenberg Opens Attack On Spitzer, Allegations

NEW YORK, Dec. 15 -- After months of public silence on his legal troubles, onetime insurance industry titan Maurice R. "Hank" Greenberg lashed out at his main antagonist, Eliot L. Spitzer, accusing the New York attorney general of misusing his broad legal powers for political gain.

"For the attorney general to use his office to prosecute, and persecute, people in the press for political gain is wholly against our legal principals," Greenberg said in an interview. "It's outrageous."

Greenberg's outburst came a day after Spitzer accused the former head of American International Group Inc. of taking part in "self-dealing" transactions in executing the estate nearly four decades ago of his friend and mentor, Cornelius Vander Starr, who died in 1968. Greenberg, who headed AIG for 37 years, was forced to step down in March after he invoked his Fifth Amendment right against self-incrimination during a Spitzer-led investigation into accounting and other improprieties at AIG.

Spitzer alleged the Greenberg-engineered deals drained value from Starr's main beneficiary, a charity known as the Starr Foundation, selling assets for $2 million that were worth $30 million at the time and would be worth $6 billion today.

Greenberg was a director of the foundation at the time and has been its chairman since 1981.

In response to Spitzer's allegations, which were made in a report to the Starr Foundation's board, Greenberg summoned a reporter to the Starr Foundation's wood-paneled offices on Manhattan's Park Avenue for a rare interview. Surrounded by aides and drinking herbal tea from a porcelain cup, the trim and combative 80-year-old denounced the attorney general's tactics as a betrayal of long-standing legal principles against using prosecutorial powers for political gain.

Greenberg said Spitzer made public the Starr Foundation report in part because late last month he had been forced to concede that he will not bring criminal charges against Greenberg for alleged accounting and other improprieties stemming from his time at AIG and will pursue instead only civil remedies. Also, Greenberg said, Spitzer was simply seeking publicity for his declared bid to become New York's governor; the election is next year.

"It's simple: He's running for another office," Greenberg said. "It has nothing to do with right or wrong."

Darren Dopp, a spokesman for Spitzer, said the office was just doing its job. "We discovered the information and we have an obligation to bring it forward," he said. He added that the information came from documents housed in AIG offices in Bermuda. "This is what we found."

Under New York law, the attorney general is the primary regulator of the state's 60,000 charities. In a letter to the Starr Foundation with the report, Spitzer recommended that the group appoint an independent committee to investigate the transactions. Greenberg said he expected the foundation's board to agree to that request and said he had recused himself from the matter.

Greenberg said that the Spitzer report utterly misrepresented the deals that took place in the years following Starr's death and that not only were they proper, they allowed the foundation to amass assets of more than $3 billion today, not including about $2 billion in donations disbursed over the years.

The deals involved stakes in three closely held companies that Starr's estate left to the foundation. Under the deals, the closely held companies -- then controlled by Greenberg and others -- bought back the Starr shares in return for cash.

While Spitzer says the prices represented only a small fraction of the companies' value, Greenberg said the prices were not only fair but were governed by long-standing agreements already in place, which Starr himself both knew about and approved.

"He set it up," Greenberg said.

He said that previous sales of the companies' shares had taken place using the same valuation method and that exceptions couldn't be made for the Starr estate. He said all parties benefited because the estate was eventually funded with AIG shares, which subsequently rose astronomically.

"AIG went on to become the largest insurance company in history -- okay? -- and it benefited everybody," he said.