AIG Bailout Trial Turns to Whether U.S. or CEO in Charge

by Andrew Zajac and Christine Smythe for Bloomberg Businessweek

Former American International Group Inc. (AIG:US) Chief Executive Officer Edward Liddy will face a key question on the witness stand in a trial over claims shareholders were cheated of at least $25 billion in the insurer’s bailout: was he or the government running the show?

The U.S. had a hand in everything from press releases to selection of board members after the Federal Reserve Bank of New York loaned the company $85 billion and took most of its stock, according to testimony and documents in the case brought by Maurice “Hank” Greenberg’s Starr International Co.

With Liddy’s testimony set for today, Starr’s lawyer, David Boies, has confronted witnesses this week with documents to bolster his case that the government illegally took control of the company rather than acting as a detached steward. Read more here.

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