US CONGRESS ASKS FOR MONITOR’S REPORTS ON AIG

A House of Representatives panel has asked the Department of Justice and the Securities & Exchange Commission for confidential reports on the business practices of AIG as part of a widening congressional probe into the bailed-out New York-based company, the Wall Street Journal has reported. The House committee on oversight and government reform asked for copies of the reports, which have been prepared for the government since 2005 by attorney James Cole and law firm Bryan Cave. “With taxpayers now having an 80% stake in AIG, we believe that review of these reports is critical for Congress to better understand how AIG became financially crippled and in assessing whether taxpayer dollars are being properly used for the stabilization of this once prosperous company”, committee chairman Edolphus Towns and ranking Republican Darrell Issa wrote in letters to the DoJ and the SEC. Mr Cole was assigned as a monitor inside AIG pursuant to a November 2004 settlement of allegations that AIG had sold bogus finite reinsurance products that helped buyers manipulate earnings reports. In exchange for having Mr Cole installed as a monitor, the DoJ agreed not to raise criminal charges against AIG. AIG paid $126m in the settlement and agreed to implement reforms. Mr Cole was given access to board-committee meetings and reported on AIG general corporate practices, but he wasn’t tasked to examine credit-default swaps or other transactions that led to its near-collapse and government rescue last September. AIG has paid Mr Cole and the Bryan Cave law firm around $20m to oversee its business practices, the Journal reported.