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AIG Spa Trip Fuels Fury on Hill
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But just a week before, PricewaterhouseCoopers, AIG's auditor, had warned Sullivan that the company "could have a material weakness relating to these areas," according to minutes from the company's audit committee.
Moreover, as early as March federal regulators blamed lax management.
"We are concerned that the corporate oversight of AIG Financial Products . . . lacks critical elements of independence, transparency and granularity," the Office of Thrift Supervision wrote to the company on March 10.
Just as frustrating to the committee members, Sullivan and Cassano seemed to have been rewarded for their performance, even though the company plunged under their stewardship.
AIG lost more than $5 billion in the last quarter of 2007 because of its risky financial products division, Waxman said.
Yet in March 2008 when the company's compensation committee met to award bonuses, Sullivan urged the committee to ignore those losses, which should have slashed bonuses.
But the board agreed to ignore the losses from the financial products division and gave Sullivan a cash bonus of more than $5 million.
The board also approved a new contract for Sullivan that gave him a golden parachute of $15 million, Waxman said.
As for Cassano, the executive in charge of the company's troubled financial products division, he received more than $280 million over the past eight years. Even after he was terminated in February as his investments turned sour, the company allowed him to keep as much as $34 million in unvested bonuses and put him on a $1 million-a-month retainer.
He continues to receive $1 million a month, Waxman said.
Asked why they didn't fire Cassano, Sullivan said they needed to "retain the 20-year knowledge of the transactions."
"What would he have had to have done for you to fire him?" Waxman said.
