AIG execs in Europe resist returning bonuses – source

NEW YORK, (Reuters) – AIG executives in Europe are adamant they should not have to return their controversial  bonuses and some feel that pressure on them to do so may amount  to blackmail, according to a company employee and internal  emails.

AIG Financial Products unit head Gerald Pasciucco told a  staff meeting for UK and Paris employees on Monday that he  thought a demand for repayments was to a certain extent  “blackmail,” said a London-based recipient of one of the  retention bonuses from the bailed-out insurer.

“The vast majority of people in London have made the  decision that the request is pretty offensive,” the employee  said. “It effectively constitutes blackmail whether it is  criminal or not. There is no moral reason to give it back.”

A company spokesman, however, said American International  Group had no concerns as to the legality of any repayments.
New York Attorney General Andrew Cuomo has pressed AIG and  other banks and companies receiving government bailouts on the  issue of bonuses, saying those who had returned the money “have  risen to the occasion and I applaud them.” His office is  investigating whether the AIG bonuses were paid fraudulently  under New York law.

The attorney general of Connecticut, where the Financial  Products unit blamed for bringing AIG close to collapse is  headquartered, has subpoenaed 14 current and former AIG  executives in a probe of compensation and bonus practices.

The employee at the meeting said Pasciucco recommended that  bonus recipients strongly consider returning the money but said  any decision to do so was an individual choice. The employee  asked not to be identified by name because of a lack of  authorization to speak publicly about the matter.

After the meeting, a compliance officer for the Banque AIG  unit in London went so far as to ask UK authorities from the  Serious Organised Crime Agency (SOCA) to probe whether demands  to return the payments could be considered extortion, according  to emails obtained by Reuters.

But AIG spokesman Mark Herr said in a statement yesterday that the concern by compliance officer David Haig “on  the legality of the repayments or potential repayments was not  shared by the company.”
Herr said that SOCA “has granted consent for the repayments  to go forward.”

A SOCA spokesperson said earlier in the day that the agency  could not confirm or deny if the matter was under  investigation. However, such a probe likely would be a  departure for the agency, given that its mission is to  investigate serious organized crime matters.

Some AIG employees have said they have a tough choice to  either give back bonuses they believe they earned lawfully or  face the possibility that their names could be made public by  Cuomo, who has been investigating about $165 million in  retention pay awarded by the company.

One executive vice president even published his resignation  letter in the New York Times on Wednesday. The executive, Jake  DeSantis, wrote that he had nothing to do with the credit  default swap deals that led to the company’s massive government  bailout.

In his email sent Tuesday to Banque AIG employees, Haig  recommended that they not agree to make any repayments until  SOCA had examined the issue, according to a copy of the email  obtained by Reuters.

Haig wrote that such payments could require consent by  authorities under “money laundering provisions.”

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