By David G. Savage|March 22, 2009
Reporting from Washington — Connecticut Atty. Gen. Richard Blumenthal caused a stir Saturday by revealing that the bonuses paid to employees of American International Group Inc., the embattled insurance conglomerate, came to a total of at least $218 million, well over $50 million more than the tally that set off a national uproar last weekend.
AIG paid out $165 million in retention bonuses on March 15 as part of what it described as a contractual agreement with employees that was drawn up early last year. This was several months before the sinking giant was bailed out by the U.S. government.
More than 400 AIG employees received bonuses, and Blumenthal's office said 73 of them got $1 million or more.
The difference between the two totals appears to turn on $55 million that was paid in December.
Two weeks ago, in a letter to Treasury Secretary Timothy F. Geithner, AIG's Chief Executive Edward M. Liddy said that the company had paid the $55 million in bonuses in December and that it was obliged to pay $165 million more on March 15.
The latter number set off a furor when it was disclosed last week. It put a harsh spotlight on the Wall Street culture of paying big bonuses, even when the companies are reporting huge losses. In AIG's case, the bonuses were paid to employees in the Financial Products unit, the same unit that is blamed for causing the losses that drove AIG toward bankruptcy.
President Obama said he was angered by the news. "It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," he said. But Treasury officials accepted the view of AIG's chief executive that the payments were made under the terms of a contract and could not be canceled.
In this financial scandal, like others in recent years, state attorneys general have been far more aggressive than federal regulators in pursuing legal actions against companies accused of cheating shareholders and the taxpayers.
Blumenthal and New York's hard-charging Atty. Gen. Andrew Cuomo have challenged the legality of AIG's actions, and they have subpoenaed information from the company.
Blumenthal cited AIG documents on Saturday and said they revealed how an "an emergency bailout turned into a meritless handout." He said he was not given the names of employees who received the bonuses.
The Connecticut attorney general also sharply disputed AIG's view that it was legally obliged to pay the bonuses.
