News - Giant insurer under investigation
Posted on March 21, 2008 in the Finance insurance category
The world’s largest insurer by market value is the target of a criminal investigation by the US Justice Department.
American Company finance insurance premium (AIG) is accused of helping a banking client commit fraud and keep about $762m (522m) of bad loans off its balance sheet.
AIG says it did nothing wrong while analysts say the firm’s actions fall into a legal grey area.
The Securities Exchange Commission is also investigating the case.
‘Grey area’
PNC Finance insurance yahoo auto rate
Services paid $115m last year to settle criminal charges brought by the Justice Department on grounds that it had fraudulently moved the loans off its books, inflating its profit by $155m.
“The government seems to be saying AIG sold PNC on the idea of creating special-purpose entities for these bad loans,” said Michael Nix of finance insurance tourist zurich
firm Greenwood Capital Associates.
“These weren’t necessarily illegal, but you could say they were in a grey area.
“If there are other things going on we’re not aware of, that’s another story.”
The special purpose vehicles under investigation are similar to those used by collapsed energy giant Enron to hide debt.
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