AIG won't pay $10m severance, Cuomo says

NEW YORK - American International Group, following criticism by New York Attorney General Andrew Cuomo, won't honor a $10 million severance agreement with outgoing chief financial officer Steven Bensinger, Cuomo said.

Cuomo met with AIG's new chairman and chief executive Edward Liddy yesterday, the attorney general said. Liddy agreed to provide an accounting of all compensation paid to AIG's senior executives and assist in recovering any illegal expenditures, Cuomo said. The payments include those made to ex-chief executive Martin Sullivan and Joseph Cassano, former head of the financial products unit for the New York-based insurer.

AIG, which received an $85 billion bailout from the US government last month, also agreed to immediately cancel all junkets and perks, according to the statement jointly issued with AIG.

"If unjust compensation was paid and the company was undercapitalized, we believe we have reasonable grounds to capture funds," Cuomo said.

Cuomo said he had not yet determined the employment contacts were illegal or, to the extent they were, how much he will seek in terms of recovery. AIG agreed not to make payments pursuant to Bensinger's employment agreement in light of Cuomo's review.

"We're reviewing everything and making an effort to identify activities that aren't critical and reviewing executive compensation," said AIG spokesman Nicholas Ashooh, declining to comment further on Bensinger.

The company will be canceling more than 160 conferences and events, some exceeding more than $750,000 per event, which Cuomo's statement said will save more than $8 million.

The company also will institute new expense management controls, Cuomo said, to prevent any unwarranted expenditures.

David Herzog was promoted to replace Bensinger, the company said yesterday.

The company has been castigated by officials since it hosted a $440,000 conference at a California resort after agreeing to the bailout to avoid bankruptcy.