Skip to comments.(2005) Investigation of Insurance Puts Buffett in a Spotlight (AIG meltdown)
Posted on 09/22/2008 3:41:05 PM PDT by Liz
March 28, 2005
.....investigators on three continents are examining Buffet's Berkshire insurance affiliates .......the company is in the unfamiliar position of having to defend its integrity. Berkshire insurance affiliates are involved in what investigators describe as possible financial manipulation at insurance giants like AIG and Zurich Financial Services Group.
Investigators are trying to determine the extent of senior executives who oversaw insurance operations that sold products at the core of international regulatory scrutiny.
The broad investigation into the insurance industry has already brought down top executives including Maurice R. Greenberg, the former chief executive of AIG.........regulators are looking at a deal Mr. Greenberg struck in late 2000 with the General Re Corporation, a unit of Berkshire athaway......described as being "at the center of the storm."
Although he is known for multi $billion returns on investments in Coca-Cola, The Washington Post, Gillette and other concerns, Berkshire is an Omaha holding company that owns major insurers including National Indemnity and General Re. As Berkshire's insurance offerings have evolved, it has crafted ever more esoteric products that in theory exist to help users insulate themselves financially from the world's calamities.
But in practice, law enforcement officials and regulators say, users have deployed these same products to manipulate corporate earnings or mask underlying financial woes.
The SEC; DOJ; the NYAG, Eliot Spitzer; and regulators in Ireland, Britain and Australia are all shining investigative spotlights on arcane products known as finite reinsurance - with General Re figuring in each of those investigations. Fitch Ratings, a firm that monitors insurers, criticized finite reinsurance in a recent report, noting that its "primary purpose is not true risk transfer in the traditional sense, but financial statement enhancement"........ in many instances the suspect buck stopped at Berkshire's door.
(Excerpt) Read more at nytimes.com ...
EXCERPT People with an insider's view of the American International Group saga aren't wondering if someone will be indicted, or whether the company will have to pay a high price for its misdeeds. Both of those are foregone conclusions. A collision of interests might be inevitable since the New York Attorney General Spitzer and the feds seem to be working at cross purposes. Spitzer obtained the cooperation of AIG executive Joe Umansky. But Umansky doesn't have a deal with federal prosecutors. The feds did a plea agreement with Richard Napier and John Houldsworth, both of General Re, for actions taken in connection with AIG. But neither of those guys have deals with Spitzer. I called but nobody would talk about this. http://www.nypost.com/business/25119.htm
Wellll.....wellll.....wellll....maybe this explains some of Buffet’s liberal tendencies....
Say it ain’t so. Warren’s stock could tumble 140,000 a share down to zippo if he played games or cooked the books. I really don’t think that Mr. Clean Warren Buffet did anything wrong other then supporting Obama!
It’s very interesting reading these flashbacks.
It’s such a great feeling to know that the MSM can run but there’s nowhere for them to hide anymore.
The pols can’t flap their jaws out in the hinterlands without their gaffes being exposed-—and evergreened-—on YouTube, and the pols and MSM can’t write “it’s Bush’s fault” (or whatever) when we, the people, can easily prove otherwise.
Not only prove otherwise, but get the word out there through the people’s media-—blogs, FR, talk radio.
It’s a beautiful thing.
My hunch is that both Buffett and Spitzer were the triggers that sent this house of cards sprawling over the American financial landscape in a wreck of huge proportions!!!
Hunch number two is that Americans and American investors have had their confidence shaken in both the financial giants, but also in our government and in it's ability to properly resolve this. Thus the market dive again today...
Hunch number three is that NO politicians are willing to do anything that is right because it is too hard and will require them to use good judgement, rather than "compassionate" correction that will fall far short of what's really going to be needed!!!
Ouch! I should have looked before posting........ It did tumble big time today.
52Wk High: 151,650.00
52Wk Low: 111,000.00
After Hours: 130,700.00
Wonder how this is going to affect Warren and Bill Gates’ $billion do-gooder non-profit foundation.
He and bill gates have things to answer for... and one day they will. Clean... that’s a joke.
Dem plotting to ruin the economy should not be ruled out.I do not. The bustards want power so bad they would turn the USA into a unit of the World Wide Caliphate as long as the Mullahs would allow the Dems proxy rule, its just that bad.
Less pumping of Arab Oil, A burgeoning sub standard mortgage portfolio initiated by Clinton,then George Soros and Warren Buffet? Put former Obama campaign managers into that mix and you have an interesting array of coincidences. Then we have T Boon Pickens with Natural Gas Nancy Pelosi lookinig to have a huge boob doggle federally subsidized natural gas program?
There is so much shite to pass around we won't be able to compost it all.
Naturally it should be stuffed right back up their respective patooties. Pass the popcorn.
When McCain/Palin wins this, heads will begin to fall, which is why there is so much desperation for Obama to win, over on the "far side" of liberal Wall Street.
Too bad it’s not G.Sorra$...
Wouldn't be surprised if he spends the rest of his now short life in a cold dungeon-like prison high up on a Peruvian mountain.
Can you guarantee this? Don't get your hopes up too high. Remember these are politicians that are owned by the real players in the world. Even Reagan didn't screw with Rockefeller.
Well, I’ve never been happy with Buffet either as he was out here advising Arnold to ditch Prop 13 and keeps telling everybody we don’t need to eliminate the Estate Tax on dead people!!! Screw him!!!
I'm afraid yer right on da money. This is like an old southern true story about a rich old oil guy whose son got popped for a big dope deal. The dad then got popped bribing a judge to get the kid off. Before the dust settled the old guy was quoted as saying "This is all like a big bucket of shiite. The more ya stir it, the more it stinks.
But see... Tough love, although a conservative trait is just way too mean to be tolerated by the “chickified” Amurikin publick!!! (snort!)
To: AmericanMade1776; Grampa Dave; calcowgirl; Anybody; Everybody; All
Can anyone tell me if Warren Buffets company owns any of AIG???
22 posted on Tuesday, September 16, 2008 10:33:50 AM by SierraWasp
BULLETIN: BERKSHIRE HATHAWAY TO INVEST $5 BILLION IN GOLDMAN SACHS
BULLETIN: BERKSHIRE HATHAWAY TO INVEST $5 BILLION IN GOLDMAN SACHS
What is the connection of Buffet on T.V. saying what a good guy Paulson is? My lefty friend is all at ease now because she trusts Buffet and he trusts Paulson. The only way I could pull her back from the edge was to note that BUSH chose Paulson and also trusted him and that gave her SOME pause to think...but then at that moment she coincidentally had to go...always happens with them.
These financial guys are Major Users. They play off each other---sophisticated mind games to get a specific reaction. They then turnaround and use other person for The End Game........ to enrich themselves. Very much in evidence when Lehman's Fuld testified before Congress yeaterday.
Does your lefty friend trust Bernanke, too (snicker)?
" Golly Ben, bailing out hedges and other greedsters who bought Fannie frauds is hard work."
"Keep bailing, Paulson."
(2005) Court Papers Detail Bonuses at A.I.G.
(company registered in Panama-—offshore mney-launder haven)
By LYNNLEY BROWNING, NY TIMES, May 19, 2005
Fresh details have emerged in court papers about the inner workings of a private offshore company that had been paying big bonuses to top executives of the insurance giant American International Group (AIG). The company, Starr International, awarded tens of millions of dollars in payouts over a two-year period at a time when it was ineligible to do so under its own operating laws, according to the court papers, which cite internal A.I.G. documents. The new details are contained in an amended lawsuit that was filed late Tuesday in Delaware Chancery Court by a Louisiana pension fund that is suing A.I.G. and its directors over what it calls questionable dealings. Those dealings are said to include undisclosed related-party transactions conducted by A.I.G. with StarrInternational and with another A.I.G.-affiliated private company, C. V. Starr & Company.
Starr International, which is registered in Panama, is A.I.G.’s largest shareholder, with nearly 12 percent of A.I.G. stock, now worth around $16 billion. The company is run by A.I.G.’s recently ousted chairman and chief executive, Maurice R. Greenberg, and by a handful of other senior former A.I.G. executives, all hand-picked by him. Mr. Greenberg is president and chief executive of Starr International, and owns about 8.3 percent of the private company.
Federal and New York investigators have been looking at the Starr affiliates as part of their investigations into questionable transactions by A.I.G. Starr International, according to A.I.G.’s 2000 annual report, is not supposed to set aside A.I.G. shares for executives during any two-year period in its compensation plan when A.I.G. does not report growth in its earnings per share. Nevertheless, when A.I.G. had no such growth around 2000 and 2001 because of claims stemming from the Sept. 11 terrorist attacks, Starr International set aside Shares totaling $41.7 million, the court papers say. A spokesman for A.I.G. declined to comment.
Even though Starr International had been a long-term incentive compensation pool for A.I.G.’s top 700 executives and managers, all of its payouts were decided upon within the private company, without the participation or approval of A.I.G.’s own executive compensation committee, according to the court papers.
The pension fund, the Teachers’ Retirement System of Louisiana, filed its original complaint in December 2002, but amended its lawsuit to include charges of breach of fiduciary duty stemming from questions raised since then by investigators, as well as from various settlements and announcements by A.I.G. In March, A.I.G. made an extraordinary disclosure that “internal mismanagement” and “improper accounting” had bolstered its results, and said earlier this month that correcting those errors would shave $2.7 billion of net worth from the company. A.I.G. also said that it would begin expensing Starr International’s compensation as required by standard accounting practices, something it had not done previously.
The amended complaint now includes the second private company, C. V. Starr, as a defendant. Stuart Grant, an attorney at Grant & Eisenhofer, the Delaware law firm representing the pension fund, declined yesterday to say why Starr International was not also a defendant. In an unusual move, the amended complaint asks the Delaware judge overseeing the case to place the assets of C. V. Starr in a court-appointed trust, for the benefit of A.I.G. shareholders.
C. V. Starr is a lucrative private holding company owned and run by top A.I.G. executives and incorporated in Delaware. It is known internally within A.I.G. as “the billionaires club,” according to the complaint. C. V. Starr sells specialized insurance policies with A.I.G.’s name on them and, according to previous court papers, had a net profit of $102 million from 1999 through 2002. C. V. Starr pays its approximately 80 partners, all A.I.G. executives, undisclosed dividends and benefits from its undisclosed profits.
The pension fund argues that all of the money paid by A.I.G. to C. V. Starr, in the form of various commissions, should go to A.I.G. shareholders, since A.I.G. can do the work that C. V. Starr does. The amended complaint discloses that A.I.G. paid direct commissions to C. V. Starr of $495.2 million from 1999 to 2003. The figure is $24.5 million more than A.I.G. disclosed to shareholders in its own S.E.C. filings, according to the complaint. Direct commissions are payments for the production of business.
When a guy like Buffet, or Pickens or Soros takes any kind of public position, there is something in it for them financially. Gore too.
Of course-——they play a high-stakes chess game——each trying to out-think each other-—the sharpies’ mental gymnastics are prodigious. They gotta line up the chess pieces and checkmate at the proper time....to cash in the big bucks.
There is too much good old boy and Political Correctness bs in selecting and keeping the companies that make up the Dow. There should be an auto chopping point, when the total cap value drops below a certain point, and that company should replaced by a stronger company. This should be an automatic computer generated move every month or at a minimum of every quarter.
Although he is known for multi $billion returns on investments in Coca-Cola, The Washington Post, Gillette and other concerns, Berkshire is an Omaha holding company that owns major insurersIMHO Buffett's entertaining Jim Thorpe all American investor persona serves merely as a "front" to obfuscate the true source of his wealth - selling insurance. It's my admittedly limited understanding of insurance that all roads eventually lead to "names" placing bets with Lloyds of London.
i have referred to Buffet over the years as the Whoreacle of Omaha.