AIG to suspend millions in payouts

By Mercedes Jackson

Commentary October 22, 2008 at 08:00 PM

Share & Print

New York's attorney general announced Wednesday that of the $85 billion loan the American International Group received from a government bailout, they are suspending payments to executives.

The suspended payments are supposed to come from a $600 million bonus fund, including $19 million in payments to AIG's former chief executive, Martin J. Sullivan. It is unknown how much of the $19 million Sullivan has already received under the contract.

New York attorney general, Andrew M. Cuomo, says the suspension is in effort to prevent former AIG executives from receiving bonuses and compensation. Many of the potential executive recipients are those who undertook the financial transactions that almost led to the collapse of the company.

On a conference held by The New York Times reporter Jonathan D. Glater, Cuomo said, "There should not even be any contemplation of bonuses for executive performance because I find it hard to conceive of a situation that you could justify a performance bonus for management that virtually bankrupted the company."

AIG's company trips to the spa and payment of bonuses, have almost depleted the $122.8 billion received from the Federal Reserve — ultimately costing taxpayers.

In the same interview conducted by Glater, Cuomo said, "once a company accepts tax dollars, there are different rules. These are taxpayers who did not voluntarily make an investment in these companies. In many ways it was a forced investment."

NOT FOR REPRINT