An Analysis of the Scandal of AIG Essay

AIGs Scandal and Fall From GraceAt the end of 2004, insurance giant AIG, or the American International Group, had a net worth of 83 billion. The year did not pass by without some controversy however. AIG was found guilty by the SEC of helping PNC Financial Services hide their losses by moving them to an off-balance-sheet entity. While AIG never admitted to this, they were required to pay 126 million in fines and subjected to a rigorous examination of transactions going back to the beginning of 2000. Considering the fact that AIG was found guilty of a similar offence in 1998, we can see that measures have not been taken to reduce fraud. The investigation the SEC conducted would go on to find that these two incidents were not isolated, but rather, AIGs way of doing business.AIG was founded in 1919 in Shanghai, China and ever from the start has been an international company. According to their website, they provide insurance customers in over 130 countries. In 1960, Hank Greenberg was hired and worked his way up, being named CEO in 1968. AIG went public the next year. Under Greenbergs watch AIG grew into one of the largest companies in the world. In 2000, investment firm Payne Webber was quoted as saying We have come to view AIG as almost the equivalent of a sovereign corporate nation, with its own diplomatic ties, economy, and head of state.In many ways Greenberg was a visionary, expanding AIG into a multi-faceted company. Under his leadership AIG started doing business in mortgage insurance and pollution liabilities while also entering into Chinese marketplace. That being said, AIG and Greenbergs rise to prominence was not completely legal or honest, as the SECs investigation would discover.The findings from this investigation would uncover one of the largest accounting scandals in the history of the United States. At the time AIG was considered one of the most reliable stocks around and with good reason...

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