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AIG suspends lobbying activities amid growing
backlash
By Francesco Guerrera in
New York and Stephanie,Kirchgaessner in Washington
Published: October 21 2008 03:00 | Last updated: October 21 2008 03:00
AIG, the US insurer bailed out by the government, has suspended its lobbying
activities a week after ruling out such a move amid a growing backlash over
its use of taxpayers' money.
The company, which is being kept afloat by an $85bn government loan, said
the decision was part of an internal review aimed at cutting expenses and
"returning every cent of taxpayers' help".
However, AIG said it would keep its government affairs office, which
accounts for the bulk of its lobbying expenses, open - a decision that could
spark renewed criticism from politicians.
"We're reviewing all of our expenses and activities. As part of that we have
suspended lobbying activities," AIG said, adding it had already cancelled
160 corporate events for an estimated saving of $80m.
The move to halt lobbying is a U-turn from AIG's previous position, first
reported by the Financial Times last week.
At the time, the company argued it needed a voice in Washington to keep
track of legislation affecting its business despite the fact the US
government owns an 80 per cent stake.
AIG did not say when it would resume lobbying but said that it would
continue to pay staff in its government affairs team to monitor legislation
and carry out other duties. People close to the company said that for the
time being it would stop using outside lobbying firms and cease lobbying
state governments.
This year, AIG has spent $6.6m on in-house lobbying activists, while outside
lobbyists have been paid $768,000, according to the Center for Responsive
Politics.
The move to halt lobbying activities underlines the intense political
pressure AIG has been under since a Congressional hearing a fortnight ago
criticised it for hosting a $400,000 lavish retreat for insurance agents a
week after the government bail-out.
Congressional and regulatory scrutiny of AIG has increased in recent weeks
following the Federal Reserve's decision to throw the company another
lifeline by providing an additional $37.8bn in liquidity.
Under pressure from Andrew Cuomo, the New York attorney-general, AIG has
also agreed to help recover any illegal compensation payments made to Martin
Sullivan, former chief executive, and other senior management.
The company, which is scrambling to sell assets to repay the government
loan, is also withholding an estimated $10m payment from Steven Bensinger,
who served as chief financial officer until May.
Copyright The
Financial Times Limited 2008 |
