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, and in mid-October, 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.
The announcement was 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.”
AIG has agreed to scrap meetings and events that represent a total cost of more than $8 million and to account for all compensation paid to its senior executives. Among the meetings cut: A risk management conference planned for October 2008 at the Ritz-Carlton, Half Moon Bay, costing approximately $500,000, and a sales conference at Sea Island scheduled for November 2008.