George S. May Business Blog

Andrew Cuomo’s blackmail…err…recommendation

“March 24 (Bloomberg) — Nine of the top 10 recipients of bonuses at American International Group Inc. agreed to give back the money and half of the total $165 million paid may be retrieved, said New York Attorney General Andrew Cuomo.

Cuomo said 15 of the top 20 bonus recipients agreed to return their entire bonuses, accounting for $30 million. Employees have agreed to give back $50 million in all, and it might be possible to recoup $80 million, Cuomo said. He said there is no “public interest” in identifying those who return the money.

AIG paid $165 million in “retention” bonuses this month to employees of its Financial Products unit, whose losses almost drove the company out of business. The bonuses, granted while AIG was getting a federal bailout package valued at $182.5 billion, sparked outrage from President Barack Obama, lawmakers and the public. The company has said its employees have been subject to hate mail, harassment and death threats.

Cuomo, who got the names of AIG’s bonus recipients last week after he subpoenaed them, said yesterday in a conference call with reporters that he was continuing to assess the security risks of releasing the names. He said he won’t identify those who give back the bonuses.

“If a person returns the money, I don’t believe there’s a public interest in releasing their name,” Cuomo said. Of the bonuses paid by the New York-based insurer, about 47 percent went to Americans, who are within his jurisdiction, Cuomo said.”

I’m sorry, but is this not extortion? Blackmail?

Well, if the above didn’t convince you, how about this email, from AIG to its employees, that was uncovered by the folks down at CNBC:

“Please be aware that we have received assurances from the Attorney General Cuomo that no names will be released by his office before he completes a security review which is expected to take at least a week…To the extent that we meet certain participation targets, it is not expected that the names would be released at all”.

In other words, if you give back the money we can be sure that your name won’t be released. If not, we cannot be sure that they won’t be released.

Hmmm…Quid pro quo, anybody?

I watched the hearing, live, where CEO of AIG, Ed Liddy, (left), read back some hate-emails the company had received from people in the general public and they were quite discomforting. I don’t need to go into depth on this subject, but I do remember certain quotes read aloud talking about hanging the execs and their families with piano wire, along with many other grotesque, disturbing threats. Mr. Liddy read these emails to assert his case in not releasing the execs’ names to the publicout of measures for the safety of themselves and their families. Do you know what the Chairman’s response was? Well, in summary: I don’t care, and I will subpoena you to provide those names if I must, and I will make them public.

So, in fact, Cuomo’s extortion of the execs may end up being beneficial for all parties:

The AIG execs return the money, Cuomo gets the names and a little “v” for victory, and as a result Chairman Barney Frank feels satisfied that the right thing has been done without anybody getting hurt.

Then again, with amount of media attention dedicated to this matter, it is all but certain that these names will be leaked out. Hopefully, for the safety of the executives, by that point the public scrutiny of these men will have diminished due the fact they returned the bonuses.

Chairman Barney Frank

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