AIG AND GREENBERG AGREE TO BINDING ARBITRATION

New York-based AIG and former boss Maurice “Hank” Greenberg have agreed to enter binding arbitration to resolve their long-standing legal disputes. While the arbitration process is scheduled to commence by October 15 and conclude by next March 31, the two sides have agreed to meet privately in advance of the first arbitration hearing in an attempt to resolve some of their disputes. Also agreeing to arbitration was Howard Smith, AIG’s former chief financial officer. Disclosure of arbitration was made just days after new AIG chief executive Robert Benmosche said in several interviews that he wanted to improve relations with Mr Greenberg, who was forced from the helm in 2005 amid an accounting scandal. AIG went on to pay $1.6bn to settle the accounting investigation and filed a $1bn lawsuit against Messrs Greenberg and Smith over their role in the scandal. AIG has also sued the Greenberg-controlled Starr International Co (SICO) for $4.3bn on accusations that it had wrongly taken control of a large block of AIG shares. A jury ruled in July that SICO had not violated a trust agreement with AIG or improperly seized the shares. The advisory verdict was affirmed by US district judge Jed Rakoff on Monday. “Viewed in its entirety, then, the evidence simply does not show by any standard, let alone by unequivocal evidence, that in 1970 AIG intended to create or believed it was creating the trust it now alleges it created”, the judge said.