WASHINGTON (AFP) — AIG spent more than 440,000 dollars for an executive getaway at a California beach resort just days after the insurance giant was rescued by an 85-billion-dollar US government loan, lawmakers said Tuesday.
"Less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation," Democratic Congressman Henry Waxman told the House Committee on Oversight and Government Reform.
The US Federal Reserve stepped in to save American International Group from imminent collapse on September 16, with a loan that gave the US government a stake of 79.9 percent in the insurance behemoth in the deal.
"Less than one week later, AIG held a week-long retreat for company executives at the exclusive St. Regis resort in Monarch Beach, California," Waxman said.
Invoices showed that AIG paid the Pacific Ocean getaway resort more than 440,000 dollars, Waxman told the committee on its second day of hearings on the Wall Street economic crisis.
The charges included close to 200,000 dollars for rooms -- which cost between 425 and 1,200 dollars per night -- over 150,000 for meals and 23,000 in spa charges, he said.
"Well, average Americans are suffering economically. They're losing their jobs, their homes and their health insurance," Waxman said, "We'll ask whether any of this makes sense."
Without the government loan, analysts had argued that an AIG collapse, fueled by problems with complex derivatives known as credit default swaps, could trigger a wave of failures in the global financial system and deepen the credit crunch.
"AIG spent -- listen to this one -- 23,000 dollars at the hotel spa and another 1,400 dollars at the salon," said Democratic Congressman Elijah Cummings of Maryland.
"They were getting their manicures, their facials, their pedicures and their massages while the American people were footing the bill."
Cummings pointed out that AIG spend 7,000 dollars in green fees at the golf course and 10,000 on bar tabs as he turned his questions on former AIG chief executive officers Robert Willumstad and Martin Sullivan.
"I do find it interesting that Mr. Willumstad knows nothing about it, but this came just a week after -- after you left. Did you know that, Mr. Willumstad?" Cummings asked.
Willumstad answered: "I heard you say that, but I was totally unaware that there was any plan for any conference."
"And, Mr. Sullivan, I'm curious, what were your views on this?" Cummings asked.
"You know, obviously, I left the company many months earlier prior to Mr. Willumstad. But if I'd have seen bills like that, I can assure you, as the CEO, I would have been asking questions," Sullivan said.
Waxman noted that longtime former CEO of AIG, Maurice "Hank" Greenberg, "told the committee he is too ill to appear today to answer questions."
"Mr. Greenberg blames Mr. Sullivan and Mr. Willumstad for the downfall of AIG," Waxman noted. "Many others think it is Mr. Greenberg who sowed the seeds that led to AIG's failure."
In AIG's defense, New York State Insurance Department Superintendent Eric Dinallo told the committee that AIG may have been trying to stave off a mass exodus of top talent from the company.
"So if there was a thinking that they needed to bring everybody together in order to keep the productivity of the insurance companies intact and protect policyholders by keeping them from going into a runoff status," said Eric Dinallo.
"I do agree that there is some profligate spending there, but the concept of bringing all the major employees together... to ensure that the 85 billion could be as greatly as possible paid back would not have been a crazy corporate decision."
Cummings later told CNN that revelations of the resort spree "upset my constituents, many of whom are losing their houses and losing money in the 401(k)s (retirement savings plans). They are upset and rightfully so."
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