Buffett appears in AIG probe

Eileen Alt Powell

Tuesday, April 12, 2005 | 9:26 a.m.

NEW YORK -- Billionaire investor Warren Buffett was questioned by regulators Monday in connection with federal and state probes into the insurance company American International Group Inc., saying afterward, "I told them everything I know."

But the lawyer for Maurice "Hank" Greenberg, former chairman and chief executive of AIG, said his client would invoke his Fifth Amendment privilege and decline to answer questions from the Securities and Exchange Commission and the New York attorney general's office in an appearance slated for today.

Lawyer David Boies said the large number of transactions being examined and that fact that some occurred years ago "have precluded Mr. Greenberg from adequately preparing this testimony at this time."

Among the transactions under investigation is one between AIG and General Re Corp., a unit of Buffett's holding company, Berkshire Hathaway Inc.

Buffett spoke briefly to reporters as he left the Woolworth Building in lower Manhattan, where the SEC has an office. Asked whether General Re turned over documents in exchange for leniency, Buffett said, "No. We complied with the subpoena."

Buffett, accompanied by one man believed to be a Berkshire Hathaway attorney, entered a side door at the building Monday morning, avoiding more than two dozen reporters and camera crew members at the front entrance.

A spokesman for the SEC had no comment on the possibility of Greenberg taking the Fifth.

"That's his right," said Marc Violette, a spokesman for New York Attorney General Eliot Spitzer, whose office also is investigating AIG's business practices and insurance transactions.

Greenberg was forced out in mid-March as allegations of improprieties mounted. When asked by reporters about Greenberg, Buffett replied, "I don't really know anything about that."

In a written statement Monday, Greenberg noted that AIG is involved in millions of transactions each year, making it unfair to demand his testimony unless investigators narrow the scope of their questions.

"I am willing to accept responsibility and to account for the performance of my duties, but I believe that good order and fairness require that I have an adequate opportunity to be advised of the issues to be investigated and to my alleged involvement therein," Greenberg said.

In a column written for today's editions of The Wall Street Journal, Boies said Greenberg had asked to postpone the questioning to allow for more time to review the documents in the case, and to limit questions to the General Re transaction. Both requests were denied, Boies said. Investigators also would not allow Greenberg to object to questions or allow him access to a transcript of the deposition, or to make his own.

Greenberg, 79, had looked forward to the forum as an opportunity to defend himself against "leaked charges" reported in the media, Boies wrote.

"On the other hand, the risk of being set up by open-ended questioning before he had an opportunity to review documents concerning events many years ago was great," Boies wrote.

The investigators are looking into a number of reinsurance transactions, which involve insurance purchased by insurance companies like AIG. Reinsurance traditionally has been used to spread out risk among insurers but, in some cases, it has been used for the questionable purpose of polishing a company's financial statements.

In the case under review, AIG purchased reinsurance from General Re in the fourth quarter of 2000 and first quarter of 2001. Investigators have said that AIG used the deals to pump up its reserves when markets were uneasy about the company's outstanding liabilities.

AIG has said its accounting for the transactions with General Re "was improper and, in light of the lack of evidence of risk transfer, these transactions should not have been recorded as insurance."

AIG shares rose 19 cents to close at $52.10 on the New York Stock Exchange, but are near their recent 52-week low of $50.15.