Lawmaker says AIG executive should resign after resort event

By: CNN
By: CNN

NEW YORK (CNN) -- A key Democratic lawmaker called Tuesday for the resignation of American International Group's CEO after the troubled insurer held a financial planners conference last week at a posh Arizona resort.

An AIG spokesman said last week's event at an Arizona resort has "really been mischaracterized."

The company responded that the event cost AIG very little and was aimed at boosting income.

AIG had come under sharp criticism for sending executives on a lavish English partridge hunt and a weeklong retreat at a California resort after accepting an $85 billion bailout -- since grown to $150 billion -- from the federal government in September.

"These guys, they don't get it," Rep. Elijah Cummings, D-Maryland, said on CNN's "American Morning." "They came to us basically saying 'we are on the critical list, and we need a respirator,' and we bail them out, and the next thing we know, we turn around and they are going out partying and spending the taxpayers' dollars. And it's kind of -- it's very upsetting." Watch Cummings criticize AIG »

Cummings, a senior member of the House Committee on Oversight and Government Reform, called for the resignation of AIG CEO Edward Liddy, who joined the company only a few weeks ago as part of the bailout plan. But the company disputed the complaints about last week's event.

"I can understand why the congressman would be upset, but I think he's responding to an incomplete picture," AIG spokesman Nicholas Ashooh said. "This was a legit meeting. It was really for independent advisers at very little cost to AIG." Watch spokesman defend event »

Ashooh said that sponsors covered 93 percent of the $343,000 conference and that AIG's cost came to about $23,000. And, he said, the conference was not for AIG employees but for outside financial planners, who learned about AIG products -- key profit centers for the company -- at the event.

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Ashooh also said AIG canceled a speech by former NFL quarterback Terry Bradshaw at the conference.

The conference, Ashooh said, was one "that any insurance company has to do" and not a "junket for AIG top executives."

"We've certainly done some things in the past that have been worthy of criticism, but this one's really been mischaracterized," he said.

The U.S. government agreed to an $85 billion loan in September to stave off AIG's immediate collapse. On Monday, the Federal Reserve and the Treasury Department modified the original loan into a $150 billion deal with a lower interest rate and used another $40 billion to buy preferred stock.

The dealings have left the federal government owning 80 percent of AIG.

But AIG ran into criticism almost from the start. There was a $440,000 retreat at St. Regis Resort in Monarch Beach, California, and an $86,000 partridge hunt at an English manor. Last week's conference was held at the Hilton Squaw Peak Hotel in Phoenix, Arizona.

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Under an agreement with New York Attorney General Andrew Cuomo, the company agreed to freeze $19 million in payments to its former CEO, Martin Sullivan, and block distributions from a $600 million deferred compensation and bonus pool for the company's financial products subsidiary. The company also withheld a $10 million severance payment to its former chief financial officer.

Sullivan was replaced in June by Robert Willumstad, who in turn was replaced by Liddy as part of the bailout. Willumstad voluntarily gave up a $22 million severance package.

AIG reported a $24.5 billion loss in the third quarter.


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