AIG, SICO Seek to Exclude Civil Trial Evidence

NEW YORK, Jun 03, 2009 (A. M. Best via COMTEX) -- American International Group Inc. and Starr International Co. are each asking a federal judge to exclude evidence from an upcoming civil trial that focuses on control of a large block of AIG stock, according to court documents.

AIG wants to prevent evidence concerning its controversial employee bonuses from being presented during the trial.

SICO, controlled by former AIG head Maurice ?Hank? Greenberg, is trying to exclude statements by Greenberg and others over a number of years about the relationship between SICO and AIG.

Each side has filed motions asking U.S. District Judge Jed Rakoff to exclude the other?s evidence from the trial, which is scheduled to begin on June 15 in the Southern District of New York in Manhattan.

AIG argued SICO is seeking ?to exploit public emotions about bonuses and the current economic crisis. This is a textbook case of what the federal rules forbid: introducing an extraneous but highly prejudicial matter to induce a verdict ?on a purely emotional basis.??

SICO is seeking to exclude as hearsay testimony from AIG witnesses about hearing Greenberg comment about AIG stock and SICO.

It is also seeking to exclude taped comments and speeches by Greenberg, dating to the 1990s, in which the SICO-AIG relationship is discussed, because ?the nonexistent probative value of Mr. Greenberg?s speeches is outweighed by the substantial prejudice they would cause ...?

Greenberg led AIG for nearly four decades before being forced out during an accounting scandal in 2005.

He and SICO originally sued AIG in 2005, claiming the company kept an art collection belonging to SICO and valued at $15 million (BestWire, Aug. 23, 2005).

AIG then countersued over the stock issue.

SICO, which had been controlled by AIG during Greenberg?s tenure as chief executive, held the stock in what AIG claimed was a trust primarily designed to fund executive compensation plans. AIG claims Greenberg engineered a takeover of the SICO board and violated SICO?s fiduciary responsibility for the trust; SICO maintains that it owns the stock and AIG has no claim to it.

"On June 15, Mr. Greenberg will finally have to explain in open court why he caused Starr International Co. Inc. to abscond with 290 million shares of AIG stock after he was forced out of the company for his refusal to cooperate with an accounting investigation," AIG said in a statement.

The trial was originally scheduled for March but was postponed (BestWire, Feb. 27, 2009).

AIG nearly went bankrupt before being bailed out by the federal government in September, a rescue program that has increased up to $182.5 billion in federal loans and other aid (BestWire, May 13, 2009).

Most AIG insurance companies currently have a Best?s Financial Strength Rating of A (Excellent) with a negative outlook.

Shares of American International Group closed at $1.47 on June 3, down 5.8% from the previous close.