Troubled insurance giant American International Group paid bonuses of $1 million or more to 73 employees, including 11 who no longer work for the company, New York Attorney General Andrew Cuomo said Tuesday.
Cuomo subpoenaed information from AIG on Monday to determine whether the payments made over the past weekend constitute fraud under state law. Contracts written last March guaranteed employees 100 percent of their 2007 bonus amounts for 2008, "despite obvious signs that 2008 performance would be disastrous in comparison to the year before," Cuomo said.
President Barack Obama and Washington lawmakers have blasted AIG for paying more than $160 million in bonuses to employees of its Financial Products division, the unit primarily responsible for the meltdown that led to a federal bailout of the company, while the company has received billions in taxpayer bailout funds.
Cuomo said AIG mailed the retention bonus checks Friday.
In a letter Tuesday to Rep. Barney Frank, chairman of the House Committee on Financial Services, Cuomo outlined the bonus and contract information and asked the panel to take up the issue at a hearing scheduled for Wednesday.
"AIG also claims that retention of individuals at Financial Products was vital to unwinding the subsidiary's business," Cuomo wrote. But AIG has been unwilling to provide their names, despite his subpoena for the list, making it impossible to test that claim, Cuomo said. He said his office will do "everything necessary" to get the information.
The company and some federal regulators have said it was obligated by contract to make the payments. Cuomo said the bonuses might have been fraudulent if AIG officials knew the company couldn't afford them.
Cuomo said that despite their contracts, Financial Products employees agreed to take 2009 salaries of $1 in exchange for receiving their retention bonus packages. He said the fact AIG could negotiate the terms of the payments "flies in the face of AIG's assertion" that it had no choice but to make the contractual bonus payments.
"You could argue if the taxpayers didn't bail out AIG, those contracts wouldn't be worth the paper it's printed on," he said Monday.
There was no immediate AIG comment following Cuomo's disclosure Tuesday of the bonus amounts.
According to the attorney general's office, the top individual bonus was more than $6.4 million, and the top seven received more than $4 million each.
Copyright © 2009 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.