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Former Olympic Rower Turned to Minimalism to Pay Down $82,000 in DebtAfter getting the U.S. Treasury to cough up another $6.3 billion worth of our money to keep American International Group (NYSE: AIG) going, its executives are getting smarter about how to use our money to pay for their plush retreats. Rather than advertise those junkets, AIG executives are carefully hiding their presence as they enjoy our money. Some might think it's wrong for AIG to do this, but let's not forget that Treasury has already invested $159 billion of our money in 24 banks and $26.6 billion of that could go to paying bankers' bonuses.
What is AIG's latest executive vacation? Its top executives held a secret gathering at a luxury resort in Phoenix -- Pointe Hilton Squaw Peak Resort -- last week. But the AIG executives tried to disguise their involvement. There were no AIG logos or signs anywhere on the property and resort employees were told not to discuss AIG. The retreat cost taxpayers $343,000 -- much of which went to the president of AIG unit Royal Alliance Associates, Art Tambaro, who stayed in a two-story Casita suite and worked out at the spa while others participated in seminars.
AIG still thinks this behavior is fine -- as long as it doesn't get caught. But this is chump change. Don't be too surprised to see the banks that got our bailout money using it to pay themselves multimillion dollar bonuses. There does not seem to be anything or anyone who can stop this blatant waste of hard-earned taxpayer money to keep executives in clover while the rest of the country's economy is frozen by the financial crisis they caused. I may be the only one, but this does not seem right.
Update. I received an e-mail from AIG spokesperson, Peter Tulupman. He forwarded a statement from Ed Liddy, AIG CEO: "Recent news reports have grossly mischaracterized an American International Group seminar for 150 independent financial planners held in Phoenix last week. The financial planners are not AIG employees. In addition, the cost to AIG for this event was minimal. More than 90 percent of the costs were paid either by sponsors or by the independent financial planners themselves."
On October 10, I issued a directive to all AIG employees and subsidiaries to reduce expenses and conserve cash, including canceling all nonessential conferences or meetings, unnecessary travel and excessive overhead. Since then, we have canceled more than 160 events. We conducted a top-to-bottom review of all expenses of the Phoenix meeting in advance and found that it was consistent with my October 10th directive. This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer."
Sounds to me like AIG is going to continue to use our money for its conferences. Why it can't find a less costly way to educate its sales force is beyond me. How about if it puts educational videos on its web site that sales people can watch. I bet that would cost far less than the resorts it's been sending its executives to on our nickel.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns AIG securities
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Reader Comments (Page 2 of 2)
11-13-2008 @ 9:39PM
bob pittsburgh said...
You all have it wrong. These guys deserve more credit-they get us taxpayers to give them billions-go on exotic trips-get yet a 2nd round of billions and more trips-utter genius!! The auto mfg should hire them for any amount they want. I cant wait fo the proxy's disclosing their pultry billion dollar bonuses (and they'll deserve it).
My hats off to them