If you’ve ever had to wait years to get a court date, or sat on a hard bench in a drafty courthouse waiting for the judge to resolve some longstanding matter, here’s one reason: Maurice “Hank” Greenberg.
Greenberg, the former chairman and CEO of what once was the worlds’ largest insurer, American International Group (AIG), is arguably the most litigious person in America – maybe with the exception of a former convict who filed 2,600 lawsuits while behind bars.
Greenberg’s name pops up in the Lexis-Nexis database more times than you can count: Securities and Exchange Commission (SEC) actions; securities suits by the New York attorney general; AIG shareholders’ suits against him; suits against AIG and him; suits by AIG against him after he left the insurer, and, finally, a federal lawsuit which refers to him as an “unindicted co-conspirator.”
The Boies club
And that’s just for starters. Greenberg has done his share of suing too, and his latest action is a shareholder suit against the government — and all of us — for “saving” AIG with a $182 billion bailout. His high-priced Wall Street lawyer, David Boies, once said that Greenberg’s cases alone took up 70 percent of his time.
But this recent suit prompted public outrage. Rolling Stone magazine referred to Greenberg as a feminine cleansing product. “If chutzpah were a crime,” said the New York Daily News, “Greenberg would be going away for a long, long time.”
What particularly angered the public: Not only had we bailed out AIG, but in so doing made Greenberg, who still owns about one-eighth of its stock, an even richer billionaire than he is already. How rich? When Forbes magazine once put him in its top 400, his net worth was nearly $3 billion. AIG has since opted not to join in Greenberg’s folly.
Hank and me
Greenberg’s fall from grace after a 34-year reign as chairman and CEO of AIG has been recounted many times by the media. But I can add something, based on my many contacts with him and stories written about him as a journalist.
He was aloof and untouchable when I first heard of him in 2003; he didn’t grant interviews. As I learned, he didn’t have to. He was financial royalty. In the insurance industry Greenberg was the equivalent of Steve Jobs, Warren Buffett (whom he knows) and Bill Gates.
Greenberg may have been one of “America’s toughest bosses,” as Fortune alleged, but was worshipped by staff and shareholders alike. Top assistants received stock bonuses in the millions, and massages in the afternoon from his personal masseuse. But they had to be awake at 3 a.m. to take his calls.
Fight to the finish
That changed in 2004, when he butted heads with then New York Attorney General Eliot Spitzer, the “sheriff of Wall Street.” Greenberg dismissed Spitzer’s criticism of his creative accounting, calling it “foot faults,” a tennis term Greenberg used to indicate that he’d done nothing wrong.
Spitzer went ballistic and threatened to put AIG out of business. Greenberg’s handpicked AIG board members sided with Spitzer. They threw Hank under the bus — unceremoniously firing him — and the giant insurer had to pay $1.6 billion in fines and restitution.
But the worst was yet to come. Under its new leadership, but still following the Greenberg game plan, AIG overextended itself, teetered on bankruptcy, and was only resuscitated by that federal bailout.
Wanted: favorable press
And that’s how I came to know Greenberg. The once reclusive CEO went on a publicity binge to clear his name. He hired — and often fired — eight public relations firms, including well-known Washingtonians who’d held top posts in the Clinton administration.
I covered Greenberg as he gave lots of speeches, mostly mouthing conventional wisdom, but garnering headlines as a sage. He became a regular on CNBC and even hired a Boston firm which promised to get “intellectuals” to write favorable articles about him, a tactic that backfired when the firm sued for non-payment.
Starr of his own show
Greenberg’s biggest success came in the courts, and it’s not surprising since he himself is a lawyer. He paid a $15 million fine to the SEC, but collected $150 million when AIG settled a long-standing suit against him — while it was owned by taxpayers. So we effectively paid ourselves, with Greenberg receiving a $135 million commission. It should be noted that shareholder suits against him have largely been dismissed.
But best of all, Greenberg owns the private insurer C.V. Starr & Co. and an investment firm, Starr International.
During one interview of Greenberg for a profile I wrote about him, I asked what he envisioned for C.V. Starr. Most CEO’s are happy to talk about their companies. With Greenberg you would have thought that I had put dynamite under his chair.
My personal conclusion: Greenberg doesn’t run his Starr entities to make money. He uses them in the same way in which General Patton used his tanks — to run over and crush the enemy.
Revenge or redemption
At his age (87) and with all his money, why is Greenberg still fighting mad? The answer is in his makeup. Greenberg wants redemption for the humiliation suffered when he was booted out of AIG, made to look like a common criminal, and blamed, at least in part, for AIG’s collapse three years later.
I take nothing away from Greenberg’s courage or determination. He fought in WW II, fought his way to the top at AIG, and then fought to make it the world’s largest insurer. But he won’t rest until he has his (winning) day in court. And sticks us taxpayers with the bill.