Embattled AIG plans second junket next week
Bush aide calls costs ‘despicable’
WASHINGTON — American International Group, criticized by the White House, Congress and Sen. Barack Obama for hosting a $440,000 conference days after getting an $85 billion federal bailout, plans to hold another gathering for insurance brokers next week.
The event, at the Ritz-Carlton in California’s Half Moon Bay, aims to “motivate and educate” about 150 independent agents who sell AIG coverage to high-end clients, said spokesman Nicholas Ashooh.
White House spokeswoman Dana Perino on Wednesday called the expenses from the first gathering, a weeklong conference last month at the St. Regis Resort in Monarch Beach, Calif., “despicable.”
Those costs included $23,000 for spa services, according to Rep.
Henry Waxman, D-Calif., chairman of the Oversight and Government Reform Committee.
“Average Americans are suffering economically. They’re losing their jobs, their homes and their health insurance,” Waxman scolded the company during a lengthy opening statement at a hearing Tuesday.
“Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation.”
AIG considered buying advertisements to explain its position, only to be told by public relations consultant George Sard that it would be “a really bad idea.”
“To spend the taxpayer’s money on an expensive ad campaign to apologize for how you used taxpayer money leaves you open to further attacks,” Sard wrote in an e-mail to Ashooh. Sard, chief executive officer of New York-based Sard Verbinnen & Co., said the message was a private e-mail mistakenly sent to Bloomberg and wasn’t intended to be a public statement.
President Bush didn’t push for the bailout “to help top executives go to a spa,” Perino said at the daily White House briefing.
Hours later, the Federal Reserve agreed to loan AIG an additional $37.8 billion on top of the initial $85 billion.
AIG Chief Executive Officer Edward Liddy, who replaced former CEO Robert Willumstad as a condition of the federal loan, told Treasury Secretary Henry M. Paulson Jr. that the company intends to re-evaluate expenses.
“We understand that our company is now facing very different challenges,” Liddy wrote in a letter to Paulson. “We owe our employees and the American public new standards and approaches.”
Obama, the Democratic presidential nominee, said during Tuesday night’s debate with Republican nominee John McCain that AIG should repay the U. S. Treasury for the costs of the event.
“AIG, a company that got a bailout, just a week after they got help, went on a $400,000 junket,” Obama said. “And I tell you what, the Treasury should demand that money back, and those executives should be fired.”
In his letter to Paulson, Liddy said the first gathering was planned “many months” before the Federal Reserve’s loan to AIG. Next week’s meeting was also planned before the loan, Ashooh said.
“Let me assure you that we are re-evaluating the costs of all aspects of our operations in light of the new circumstances in which we are all operating,” Liddy wrote.
About 50 AIG employees will attend the Half Moon Bay meeting. Ashooh said he didn’t know the cost of the event or how long it would last. Next week’s meeting has more of an educational component than the St. Regis meeting, he said.
Receipts provided by Waxman for the earlier conference at the St. Regis were dated Sept. 22-30. AIG agreed to the $85 billion loan from the government on Sept. 16, ceding a 79.9 percent ownership interest to the U. S. government.
AIG disputed lawmakers’ characterization of the conference.
“It is an incentive program for independent agents and brokers that work with our life company in the U. S.,” said Leslie Mouat, an AIG regional president in Southeast Asia, in a Bloomberg Television interview. “Over 100 people attended. Less than 10 were AIG executives. So this was hardly a junket, that AIG executives were celebrating the Fed bailout. It’s spin, it’s media, it’s wrong.”
