In an opinion piece published in today’s Wall Street Journal, two former New York governors are urging the New York Attorney General to stop the pursuit of Maurice “Hank” Greenberg in a case tied to accounting transactions.
Mario Cuomo, a Democrat, who served as New York governor from 1983-94, and George Pataki, a Republican, who was governor from 1995-2006, write that while they don’t always agree, they now “share is a keen interest in making sure that justice is fairly administered in the state of New York.”
Referring to the Martin Act, a 1921 law, which gives the state’s attorney general extraordinary powers to investigate and litigate financial fraud, the two governors write that “misuse of the act…sends the wrong message to the business community, putting New York at risk of losing jobs and damaging its economy.”
Although N.Y. Attorney General Eric Schneiderman dropped his claim for damages against Greenberg last month, following the approval of a $115 million class action settlement in an investor suit, the attorney general is reportedly planning to seek injunctive relief under the Martin Act in the case first brought in 2005 by former attorney general Eliot Spitzer.
The case ties Greenberg to sham transactions allegedly designed to mask the financial position of American International Group, the company he led in 2005.
Cuomo and Pataki assert that the litigation against Greenberg concerns the accounting “for two entirely proper transactions that took place well over a decade ago,” and also state that neither transaction “had any impact on the net income or shareholder equity of AIG.”
“This interminable ‘scarecrow of a suit,’ which should never have been brought in the first place, ‘drones on,'” they write, quoting a passage from Charles Dickens’ Bleak House.
Referencing Schneiderman’s decision to withdraw claims for damages, the governors write that they are surprised to learn that the AG’s office has still “decided to deplete its resources and consume more of the court’s time by raising claims for injunctive relief against Mr. Greenberg that were long ago abandoned and that, in any event, are without merit and serve no conceivable purpose.”
Noting that the AG office told the court of appeals last month that the forms of injunctive relief it might seek against Greenberg include a ban on participation in the securities industry and a ban on serving as an officer or director of a public company, the two governors note that Greenberg never worked in the securities industry and has not served as officer or director of a public company since 2005. Greenberg now leads Starr International, which is not a public company.
The opinion piece stresses the need to maintain the competitiveness of New York as a global financial center, which they say would be diminished by any perception that “penalties are arbitrary and unfair.”
They also emphasize Greenberg’s contributions to the nation as a soldier during World War II, in building one of New York’s largest companies and as a philanthropist.
Mario Cuomo is the father of Andrew Cuomo, a former AG, who now serves as the governor of New York state.