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| Bonusgate: Now AIG is suing the hand that feeds it |
| 2009-03-21 |
| As AIG takes billions of dollars from the federal government to stay afloat, it is suing the government for millions more. The big insurer is trying to recover $306.1 million of taxes, interest and penalties from the Internal Revenue Service. Among other things, AIG is contesting an IRS determination last year that the company improperly claimed $61.9 million of tax credits associated with complex international transactions. AIG has also asked a court to make the government reimburse it for money spent suing the government. Given that the government owns 79.9 percent of AIG and has been using taxpayer money to fill a seemingly bottomless hole at the company, the lawsuit might seem like a case of biting the hand that feeds it. But an AIG spokesman said the company has an obligation to press its case. AIG believes it overpaid the IRS, and it "has a duty to its shareholders, including the government and other shareholders, to insure that it pays the proper amount of taxes," spokesman Mark Herr said by e-mail. Washington tax lawyer Martin Lobel agreed with that assessment. "If in fact they honestly believe that they're entitled to a refund of those taxes, it would be a breach of their fiduciary duty not to" sue, Lobel said. "On the other hand, the sense of entitlement from AIG is awesome," Lobel said. Because the dispute pits the government against a company that has essentially become a ward of the government, the only clear winners are likely to be lawyers, legal experts said. The legal expenses could consume millions of dollars, they said. "You're dealing with yourself, and you're paying a lawyer to do it. It seems kind of bizarre," said an international tax lawyer who spoke on condition of anonymity because he was not authorized to comment publicly. Lawyers at the firm Sutherland Asbill & Brennan, which is representing AIG, did not respond to an interview request. For partners of similar stature to those representing AIG, fees can run $700 to $900 per hour, said Dan Binstock, managing director of BCG Attorney Search, a legal recruiter. |
| Posted by:tipper |
| #6 Shouldn't the headline read: "Bone-Us-Gate?" Shouldn't you be picking lint out of your navel? If you aren't going to read the articles, then do the Burg a favor... |
| Posted by: Pappy 2009-03-21 22:21 |
| #5 If you've never been in a house that's collapsing, you really don't understand what is asked of those who remain to make sure it collapses gently. While no one's life is immediately threatened as with true first responders, it really makes a difference who sticks around and how motivated they are. And when you're talking billions of dollars, that makes a difference to widows and orphans, groups we've heard little about lately. Yet, when I started in banking, we often spoke of them and our responsibility to them. I fear those days are returning. |
| Posted by: Nimble Spemble 2009-03-21 19:57 |
| #4 No. That's the point of the article TW cites. |
| Posted by: lotp 2009-03-21 19:53 |
| #3 Shouldn't the headline read: "Bone-Us-Gate?" |
| Posted by: JohnQC 2009-03-21 19:13 |
| #2 No apology required, TW. It's understandable that people got hot about this. Unfortunately, it served admirably to detract attention from the massive and horrific bill that passed the House at the end of the week. And by stirring up hatred and anger at 'the rich' it plays right into Obama's goals, I fear. |
| Posted by: lotp 2009-03-21 19:12 |
| #1 A very interesting article in the Washington Post about who is currently employed by AIG, and why they were given retention bonuses. Exerpt: Who wants to hear a wealthy financier complain? And yet, within those walls off Danbury Road lies a deep sense of betrayal -- first by their former colleagues, now by their elected leaders. The handful of souls who championed the firm's now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president. "They've chosen to throw us under the bus," said a Financial Products executive, one of several who spoke on condition of anonymity, fearing reprisals. They say what is missing from this week's hysteria is perspective. The very handsome retention payments they received over the past week were set in motion early last year when the firm's former president, Joe Cassano, was on his way out the door. Financial Products was already running into trouble on its risky credit bets, and the year ahead looked grim. People were weighing offers from other firms, and AIG executives feared that too many departures could lead to disaster. So AIG stepped in with an offer to employees of Financial Products. Work through all of 2008, and you'd get a lump payment in March 2009. Stick around through 2009, and you'll get paid through 2010. Almost all other forms of compensation -- bonuses, deferred payments and the like -- have vanished. "People are trying to do the right thing," the same Financial Products executive said. "Guys have worked their [tails] off to try to get value for the taxpayer. This isn't money that's being advanced to us. People have performed the work and done it exactly as we asked them to do." It would be impractical at best, dangerous at worst, to get rid of everyone at Financial Products. If everyone leaves, Pasciucco said, "you don't have people that really, truly understand the book [of business]. We're still big enough that that matters." If they did walk out the door, who would volunteer to work at the Chernobyl of the financial world? And what would become of the mammoth portfolio that remains? "It would become the biggest naked position on Wall Street," one longtime Financial Products executive said, "and everybody would exploit it." lotp was right. I was wrong, and I apologize. |
| Posted by: trailing wife 2009-03-21 17:36 |