AIG to host second resort conference after drawing criticism
You guys heard about the 400k they just spent on a resort weekend right? Well, here they go again....
AIG to host second resort conference after drawing criticism
Oct. 8, 2008 09:27 PM
Bloomberg News
American International Group Inc., the insurer
that vowed to temper spending after hosting a conference at a
California resort amid a federal bailout, plans to sponsor a similar
event at a $400-a-night hotel.
Next week's conference is to be held at the Ritz-Carlton in
California's Half Moon Bay, said spokesman Nicholas Ashooh. The White
House, Congress and Barack Obama castigated AIG this week for spending
$440,000 last month at the St. Regis resort in Monarch Beach.
"Whether the company's behavior is wrong on an absolute basis
doesn't really matter right now," said Heather Elms, a business
professor at the Kogod School of Business at American University in
Washington. "It's become a question of perception, and it seems that
they're being viewed as behaving unethically."
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AIG, which got an $85 billion loan
from the U.S. government last month, borrowed another $37.8 billion
from the Federal Reserve yesterday to "replenish liquidity," the Fed
said. Chief Executive Officer Edward Liddy told Treasury Secretary
Henry Paulson yesterday that the company will rethink expenses.
"We understand that our company is now facing very different
challenges," Liddy wrote in a letter to Paulson. "We owe our employees
and the American public new standards and approaches."
Next week's event aims to "motivate and educate" about 150
independent agents who sell AIG coverage to high-end clients, said
spokesman Nicholas Ashooh.
'Bad idea'
AIG considered buying advertisements to explain its position, only
to be told by its public-relations consultant, George Sard, that it
would be "a really bad idea."
"To spend the taxpayer's money on an expensive ad campaign to
apologize for how you used taxpayer money leaves you open to further
attacks," Sard wrote in an e-mail to Ashooh. Sard, chief executive
officer of New York-based Sard Verbinnen & Co., said the message
was a private e-mail mistakenly sent to Bloomberg and wasn't intended
to be a public statement.
"Anyone who knows the financial
industry knows there is excess, even in normal times," said Bruce
Kogut, an ethics professor at Columbia Business School in New York.
"These are not normal times."
White House spokeswoman Dana Perino called "despicable" expenses
from the first gathering, a weeklong conference at the St. Regis Resort
in Monarch Beach that began days after the U.S. agreed to give AIG the
$85 billion. Those costs included $23,000 for spa services, according
to Representative Henry Waxman, chairman of the House Oversight and
Government Reform Committee.
AIG should repay
Obama, the Democratic presidential nominee, said during last night's
debate with Republican candidate John McCain that AIG should repay the
U.S. Treasury for the costs of the event.
"The Treasury should demand that money back and those executives should be fired," Obama said.
In his letter to Paulson, Liddy said the St. Regis gathering was
planned "many months" before the Fed's initial loan to AIG. Next week's
meeting was also planned before the loan, Ashooh said.
"This sort of gathering has been standard practice in our industry
for many years," Liddy wrote. "Let me assure you that we are
reevaluating the costs of all aspects of our operations in light of the
new circumstances in which we are all operating."
About 50 AIG employees will also attend the Half Moon Bay meeting.
Ashooh said he didn't know the cost of the event or how long it would
last. Next week's meeting has more of an educational component than the
St. Regis event, he said.
Receipts provided by Waxman for the earlier conference at the St.
Regis were dated Sept. 22 through Sept. 30. AIG agreed to the $85
billion loan from the government on Sept. 16, ceding a 79.9 percent
ownership interest to the U.S. government.