Starr Gets Boost From U.S. Documents in AIG Bailout Case
Maurice “Hank” Greenberg’s argument that the U.S. sought to evade a shareholder vote on its 2008 bailout of American International Group Inc. (AIG) may get a boost from a Fed legal adviser’s own words.
“We succeeded in finding a structure that allows the trust to gain control of the company without shareholder votes,” John Brandow, an outside lawyer for the Federal Reserve Bank of New York, wrote in a document that an attorney for Greenberg’s Starr International Co. presented on the last day of witness testimony in the Washington trial over the terms of the rescue.
The Brandow document was among more than 30,000 that were turned over to Starr this month on orders by U.S. Court of Federal Claims Judge Thomas C. Wheeler, who ruled that the New York Fed had forfeited lawyer-client confidentiality because of the way government attorneys had questioned an outside lawyer for the reserve bank.
A closing presentation by Starr lawyer David Boies today was sprinkled with references to the previously sealed documents.
Boies sought to highlight a possible contradiction to the testimony given in court by Marshall Huebner, a lawyer with the New York Fed’s outside counsel, that regulators weren’t involved in a shareholder lawsuit filed in Delaware in late 2008.
In an e-mail from that time period excerpted by Boies, Huebner, of Davis Polk & Wardwell LLP, tells a colleague that the complaint “is potentially serious” and issues an order that U.S. officials be alerted.
Starr contends in its lawsuit that the government cheated AIG shareholders by imposing onerous terms on an $85 billion loan, including 14 percent interest and a demand for 80 percent of the insurer’s equity. Starr was AIG’s biggest shareholder before the rescue.
The case is Starr International Co. v. U.S., 11-cv-00779, U.S. Court of Federal Claims (Washington).