Hank Greenberg built AIG (AIG) from a nothing insurance company to one of the largest financial services firms in the world. Along the way, he became a billionaire, but shareholders figured he was worth the money.

Then, Eliot Spitzer caught up to him and brought Greenberg up on fraud charges. He was pushed out of AIG, but remained a big enough shareholder to cause trouble.

After AIG announced that it had lost $7.8 billion last quarter and would have to raise $12.5 billion, Greenberg decided that trouble it would be. He is pushing the company to delay its annual meeting. Perhaps he wants to get some of his own people on the board and into management. Greenberg claims he does not want to reclaim his throne, but that is mendacity at its best.

There are two ways of looking at Greenberg, if investors are willing to put aside the fraud charges. In 1985, AIG traded for under $3. That number was over $70 when he was forced out. The stock now trades well below $40.

Greenberg’s argument is that his track record has brought him credibility and that earns him the right to control AIG. That convenient truth leaves out the fact that the insurance company began trading derivatives while he was still the boss. That kind of trading cost AIG billions of dollars over the last three quarters.

Greenberg could succeed at damaging the ability of the current management to continue. That may not be in his best interests, but he does not seem to have taken that into account.

Douglas A. McIntyre

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