Former CEO of AIG and majority shareholder Hank Greenberg has lost a courtroom battle against the US government over the terms of a federal bailout in 2008.
The ruling comes just three months after Greenberg reached a settlement in another legal struggle with the government in a case involving accounting fraud at AIG.
On Tuesday, an appeals court overturned a previous ruling that the government had made an illegitimate “exaction” when it acquired an 80% stake in AIG in exchange for a US$85 billion bailout, Financial Times reported.
Greenberg argued that investors got the short end of the stick in the government bailout deal. According to him, the government imposed difficult terms and failed to properly compensate investors in the company.
In 2011, Greenberg-controlled Starr International brought a legal case against the government, seeking US$40 billion in relief for itself and other shareholders. It was in 2015 that a judge ruled that the terms of the government’s “rescue” were unjust; however the judge also refused to award damages after ruling that without the bailout, AIG would have entered bankruptcy and killed off shareholder interests.
Starr appealed against the ruling, but the government also appealed in response.
Eventually, the Federal Circuit Court of Appeals in Washington on Tuesday found that Starr and other shareholders it represented lacked standing to pursue the legal claims. The court explained that the right to file a suit belonged solely to the company itself – a company that chose not to pursue legal action.
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