Maurice “Hank” Greenberg, the ex- chief executive officer of American International Group Inc. (AIG:US), asked a judge to allow his lawsuit to go forward seeking $25 billion from the U.S. over terms of the company’s 2008 bailout.
Greenberg’s Starr International Co., in arguments today in the U.S. Court of Federal Claims in Washington, argued that the company has the right to seek compensation for itself and all AIG shareholders for what it alleges was an illegal taking of property by the government during the 2008 financial crisis.
“This was a taking of billions and billions of dollars of AIG interest,” David Boies, a lawyer for Starr International, said. “The constitution says you have the right to recover what was taken and that’s exactly the situation here.”
U.S. Claims Judge Thomas Wheeler is considering a government request to dismiss the case. The U.S. argues Starr International lacks the authority to sue and has no claim.
The department said in court papers that AIG agreed to the bailout and Starr International shouldn’t be allowed in a court case to “rewrite” the insurer’s rescue agreement and make American taxpayers pay $25 billion more.
“AIG didn’t need to deal with the government if it didn’t want to,” Brian Simkin, a lawyer for the Justice Department said today. “There’s no clear showing the government acted contrary to the law.”
Rescued From Bankruptcy
The government “saved it from bankruptcy of its own making,” he said.
Starr International sued the government on Nov. 21, calling the public assumption of 80 percent of AIG stock in September 2008 a violation of the constitutional rights of shareholders to due process and equal protection of the law.
Starr, AIG’s largest shareholder at the time of the bailout, alleges that while the U.S. got so-called fairness opinions from banks on exchanging two groups of preferred stock, it failed to get such an opinion in exchanging a block of preferred stock for 562.9 million shares “for virtually nothing,” according to the complaint.
The case is Starr International Co. v. U.S., 1:11-cv-00779, U.S. Court of Federal Claims (Washington).
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