ABC News: AIG Under Criminal Investigation

Truthout

Investigations

The statement called for an “investigation of the validity of A.I.G.’s past accounting and securities disclosures and its executive compensation program by the Office of Thrift Supervision, the Securities and Exchange Commission, and the FBI.”

“I think that A.I.G. is simply one of the most obvious examples where their accounting was false. Fraudulent accounting at a publicly traded company is securities fraud and that’s a felony,” Professor Black told Truthout.

Professor Black is confident that a thorough investigation of A.I.G.’s books would reveal misdeeds. “Even though we effectively own the place, we have left it in the hands of the people who have every incentive to hide the past losses and to hide all the past accounting fraud that justified all their past bonuses. These people aren’t at risk of simply losing their calendar year 2008 bonus. If this place were torn apart properly, they’d lose all their prior years bonuses as well.”

Previous investigations of top management and accounting practices at A.I.G. have been swept under the rug with no criminal penalties.

In February 2005, A.I.G. agreed to pay $1.64 billion to resolve a lawsuit alleging the company used deceptive Enron-style accounting practices in order to mislead investors and government regulators.

Mark J. Novitsky, a corporate whistleblower and independent researcher, blames the Securities and Exchange Commission (SEC) for failing to enforce the Sarbanes-Oxley law, passed in the wake of the Enron and Worldcom accounting scandals, which was supposed to hold executives accountable for fraudulent accounting practices.

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