AIG American International Group Inc

By Leslie Scism 

Lawyers representing former American International Group Inc. Chief Executive Maurice R. "Hank" Greenberg and New York's attorney general will try mediation to resolve an 11-year-old civil-fraud lawsuit.

In the nonjury trial, which began in September, the state's attorneys are nearly done presenting their case. The long-delayed trial has included six days of testimony by the 91-year-old Mr. Greenberg.

"Now that the State has presented nearly all of its case in open court, the parties have agreed that now is a natural point to explore a final resolution through mediation," according to a statement from the office of New York Attorney General Eric Schneiderman. The mediation was earlier reported by Politico.

Mr. Greenberg couldn't immediately be reached for comment.

But Bertil Lundqvist, a lawyer at Starr Cos., an investment and insurance business run by Mr. Greenberg, confirmed mediation would begin soon. He said in an interview that mediation had been "discussed on and off" over the years, and at least one prior former mediation was attempted.

"We'll see whether it works," he said.

The lawsuit, brought by former New York Attorney General Eliot Spitzer in 2005, alleges that Mr. Greenberg orchestrated two sham financial transactions between 2000 and 2003 aimed at duping shareholders into believing AIG's core operating results were better than they were.

In his testimony, Mr. Greenberg acknowledged being aware of the transactions in their early stages and testified about phoning the chief executive of Berkshire Hathaway Inc.'s General Re unit to initiate one of the transactions. Berkshire isn't named as a defendant in the lawsuit.

But he defended the moves, as he has repeatedly over the years, saying he relied on lawyers, accountants and other trusted persons to work out details and ensure they passed legal and accounting muster. He also emphasized that the transactions were immaterial to AIG's overall results.

Mr. Spitzer's probe into AIG's accounting for these and other transactions led to Mr. Greenberg's departure from the financial-services conglomerate in 2005, after nearly 40 years at the helm building the company into a global powerhouse.

Mr. Lundqvist said Mr. Greenberg still wants vindication in the lawsuit, which Mr. Greenberg has argued was wrongly brought by Mr. Spitzer to further his political career. Over the years, Mr. Spitzer has contended the case has merit.

The executive has struck two agreements in other litigation related to the accounting probe begun by Mr. Spitzer. In 2013, a federal court approved a settlement of class-action securities litigation against Mr. Greenberg brought by AIG shareholders, and in 2009, Mr. Greenberg agreed to pay $15 million to resolve a Securities and Exchange Commission complaint, neither admitting nor denying wrongdoing.

Write to Leslie Scism at leslie.scism@wsj.com

(END) Dow Jones Newswires

December 09, 2016 18:23 ET (23:23 GMT)

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