Former AIG Executive Wins Legal Bid for $9 Million Crisis-Era Bonus

November 7, 2019 by Gaspard Sebag

A former American International Group Inc. senior trader won his bid for 8.3 million euros ($9.2 million) in bonuses in a dispute at France’s highest court that dates back to the financial crisis a decade ago.

The Cour de Cassation in Paris rejected AIG’s arguments that its massive losses in 2008 meant it didn’t have to pay a deferred bonus for the previous year or other incentives. The executive, Amos Benaroch, worked at the French arm of a unit that was linked to many of AIG’s financial problems.

The case is one of a handful remaining from the insurance giant’s near collapse during the financial crisis. In London, a group of 23 ex-AIG staff members are claiming $100 million in withheld bonuses in a similar dispute.

Marie-Alice Jourde, a lawyer for Benaroch, said she expects Wednesday’s ruling will be shown to London judges by plaintiffs in the U.K. in hopes of influencing that case.

Jourde says Benaroch initially hired her only to sue AIG for failing to pay him severance but the case changed scope when they decided to also request the unpaid bonuses.

“This took some time but the outcome is in line with principles of French law which foresee that a company can’t make its employees bear its own losses,” Jourde said by phone, adding that Benaroch wasn’t involved in selling subprime products.

Benaroch was a managing director at a Paris office of AIG’s Financial Products unit. AIGFP was blamed for almost bringing down the company with money-losing derivative bets backing subprime mortgages.

An AIG spokeswoman didn’t respond to requests for comment on the French ruling, which confirms a decision at a lower court that granted the former managing director the bonuses.

Benaroch, who was fired in 2010, was awarded 8.3 million euros by the Paris court of appeals in 2018. But the judges also ruled that he had to reimburse the company 1.6 million euros linked to a separate undue payment. Another former managing director at AIG Management France SA, Marc Alperovitch, also won a similar case at the Paris court of appeals in March and was awarded bonuses worth more than 2 million euros.