“Mr. Blumenthal’s claim that he has discovered additional AIG FP retention payments is incorrect,” said company spokesman Mark Herr in an e-mailed response to questions about AIG’s financial products division from Bloomberg News. “The payments he appears to be referring to were made months ago, have been widely reported on and we specifically disclosed to the Treasury.”
[...]
AIG said today in a statement responding to Blumenthal that “a payment under the retention program was made in December before this latest March payment. At this point, not having seen what Mr. Blumenthal said, we believe that’s what he is referring to. The March payments were $165 million, not $218 million.”

Connecticut’s attorney general says documents turned over to his office by American International Group Inc. shows the company paid out $218 million in bonuses, higher than the $165 million previously disclosed.

this is fun! too bad it’s pay-to-play!

AIG is trying to wind down this division. That means that people are out of jobs when the wind down is finished. I have seen insurance regualtors pay “stay” bonuses employees to stay during the wind down period. Why would they do this? Because it isn’t good for one’s career to hang around a defunct business unit. If they don’t pay them to stay and to work quickly, in accordance with a schedule, the employees will come in every day and look for a job. And leave when they find the best career opportunity. Usually a wind down takes about 12 to 18 months for the production side. In a mess like this, there are probaby contracts that were never written. Negotiation correspondence that is in some one’s personal email. Accounting transactions that are backlogged. Likely some of the customers never paid their premium and you could technically cancel there insurance contract and avoid some losses. All of this work goes a lot faster if you have existing employees working on it and pay them to stay and work quickly. There is no point trying to hire people to do a short term job, no matter how well qualified. Also, you have at least a pretty good chance of hiring rummies that created trouble at other failed Wall Street firms. THere is no guarantee that you are going to hire good people that are better than people you already have evaluated and who already know the procedures in your company and know where to find things that aren’t obvious.

This is further complicated by the fact that the bonuses were already promised on a date certain – March 15th. What would many of the people who still work there do if they found out that those who lived up to the bargain did not get their check? Leave en masse on the 16th and/or start looking for another job on company time.

The only thing that I wish someone had asked Liddy was why they paid bonuses to people who are still there – and presumably had not yet finished their wind down work? Perhaps there were mid term benchmarks that were met or perhaps some other reason. I would like to understand that better.

In any event, I live in Chicago and a neighbor of mine, a Senior Vice President at AIG left recently to join a competitor. No one senior is going to want to stay there, particulary after watching congressmen try to bully your CEO into reciting names of highly paid people on the TV. The best people will find alternatives and they will do it while you are paying them.

For all intents and purposes this company is already in receivership. They just want to hold it together, isolate the problem business, and sell the rest. It is going to be difficult to sell the company without experienced people there to assist with the due dilligence process and to run it. Service industries are all about the people. There is nothing there if the people are gone and they take business with them. The people trying to buy the company know that.

http://www.butasforme.com/2009/03/17/obamas-stimulus-bill-explicitly-grants-aig-the-legal-right-to-hand-out-bonuses/

Obama should take full and direct responsibility for this mess.

As I understood Liddy, the commitment to pay was made early last year. It was made to retain them but payable when they had completed their task.