Less than half of AIG bonuses returned

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By Sean Lengell

American International Group Inc. employees have returned less than half of the $45 million in bonuses they promised to repay in a good-will gesture after the company received tens of billions of dollars in taxpayer aid, according to the Treasury Department's independent watchdog.

A public outcry erupted in March when news broke that AIG paid out at least $165 million in executive bonus pay - after being awarded $180 billion in taxpayer loans and incentives to keep the company from collapsing.

Days later, seeking to ease criticism of the company, new AIG Chief Executive Officer Edward M. Liddy told a packed House committee hearing that he had asked employees to voluntarily give back at least half of their bonuses. Mr. Liddy, appointed to the executive post after news of the company's problems broke, said he lacked the legal authority to rescind the bonuses altogether.

But an audit of the AIG bonus program released Tuesday by Neil Barofsky, special inspector general for the Troubled Asset Relief Program (TARP), found that, as of August, AIG had received pledges from employees to return only $45 million in bonuses.

And to date, only a little more than $19 million of bonus payments has actually been returned, the report said.

AIG officials told auditors that recouping the full amount pledged has been delayed as the company negotiates with employees to restructure a second round of bonus payments totaling $198 million scheduled to be awarded by March.

The company also is in talks with Kenneth Feinberg, the Obama administration's "pay czar" for companies receiving bailout money, regarding future payments to employees of the AIG Financial Products (AIGFP) division, where the bulk of the bonuses were handed out.

"It's described to us as a wait-and-see attitude," said Mr. Barofsky, testifying before the House Oversight and Government Reform Committee on Wednesday. Employees "want to see what they're going to be getting after Mr. Feinberg conducts his review of the $198 million next March before they commit or fulfill their commitment to pay back the bonuses."

Mr. Barofsky added that he was doubtful the Treasury Department would be able to collect the full $45 million of pledged money.

"AIG has noted that it'll be difficult for them to enforce collecting the money for those that have left the company," Mr. Barofsky said.