Anti-Greenberg smears probed

House Democrats are investigating AIG's role in a campaign to discredit its former chairman and chief executive Maurice “Hank” Greenberg by two public relations companies Burson-Marsteller and Hill & Knowlton, Bloomberg reports.

House Oversight and Government Reform Chairman Edolphus Towns asked AIG to detail its relationship with the PR firms.

“I would be extremely disappointed to learn that any of the billions of taxpayer dollars invested to support AIG may have been diverted to finance a public relations campaign against critics of the AIG bailout,” Towns wrote in a letter to AIG chairman and CEO Edward Liddy.

The committee was told that AIG had contacted reporters and others to attack Greenberg’s credibility as he was preparing to testify about the company’s collapse to the committee on 2 April.

The committee chairman asked Liddy to provide copies of contracts, white papers, memoranda and bills received from the firms, both owned by London-based WPP Group.

In his letter, Towns referred to a four-page paper titled “The Greenberg Legacy,” which was circulated to the news media prior to Greenberg’s appearance before the committee. The paper said that Greenberg personally created AIG Financial Products in 1987 “in an effort to increase earnings by AIG” and that he moved AIG “away from its core insurance expertise into the entirely different and complex world of credit derivatives and other complicated financial products.”

“The committee was surprised to hear allegations that AIG was contacting the news media and others to attack Mr. Greenberg’s credibility, and circulating an anonymous paper entitled ‘The Greenberg Legacy,’” Towns said in the letter to Liddy.

The memo, which was distributed digitally as a Word document, contains background data indicating that it was created by AIG.

AIG spokesman Mark Herr said Greenberg and his lawyers have made “false and misleading statements” about AIG more than 30 times since the beginning of the year.

“This issue is not about AIG’s corporate public relations expenditures, which are down sharply since last year,” Herr said. “It is about correcting Mr. Greenberg’s false and damaging statements.”

Neither PR firm commented.