Just days after insurance behemoth American International Group announced that it was being rescued by an $85 billion loan from the Federal Reserve, top-producing agents were checking into the luxury St. Regis Resort, Monarch Beach (Calif.), for a recognition event sponsored by AIG. When news of the conference broke, commentators had a field day and AIG found itself in a public relations nightmare. White House Press Secretary Dana Perino, for example, called AIG “despicable.”

The fallout continued today, when AIG Chairman and CEO Edward M. Liddy announced that the company had “agreed to immediately cancel all junkets or perks which are not strictly justified by legitimate business needs.” Included are more than 160 conferences and events with a total cost of more than $8 million.

How much the company will pay in cancellation fees was not included in the announcement, which came as part of a joint statement from AIG and New York Attorney General Andrew Cuomo. Two days earlier, Cuomo had sent a letter threatening AIG with legal consequences if it failed to “recover improper bonuses and other payments and perks from its former executives.”

At first incorrectly referred to as an executive retreat, the St. Regis event was held by an AIG life insurance subsidiary to reward 100 independent agents who had qualified for the trip.

CEO Liddy initially wrote a letter to U.S. Treasury Secretary Henry Paulson stating that “while this sort of gathering has been standard practice in our industry for many years and was planned months before the Federal Reserve’s loan to AIG, we understand that our company is now facing very different challenges. We owe our employees and the American public new standards and approaches.” At that point, only one upcoming incentive program—booked into The Ritz-Carlton, Half Moon Bay (Calif.)—was canceled.

Now AIG has scrapped all upcoming recognition programs and has agreed to account for all compensation paid to its senior executives. In agreeing to Cuomo’s demands, Liddy stated, “We know that the Attorney General shares our commitment to rebuilding AIG’s business and paying back the U.S. taxpayer, and we will address [his] concerns expeditiously.”

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