- The Washington Times - Wednesday, October 14, 2009

The Treasury Department failed to investigate adequately a massive and complex employee bonus program at American International Group before giving the faltering insurance company billions in taxpayer aid, according to a new report by Treasury’s independent watchdog.

The multibillion-dollar “executive” compensation program was so widespread that even kitchen workers and mail-room assistants benefited, says an audit released Tuesday by Troubled Asset Relief Program (TARP) Special Inspector General Neil Barofsky.

Treasury’s failure to discover the scope and scale of AIG’s bonus obligations “potentially resulted in a missed opportunity to avoid the explosively controversial events and created considerable public and Congressional concern,” the report says.

AIG’s compensation package included 620 separate bonus programs totaling about $455 million for 51,500 employees, 13 employee retention plans allocating about $ billion to almost 5,200 staffers, and $311 million in deferred compensation paid to about 5,400 employees.

The range of compensation varied greatly, with some 62 executives receiving more than $100,000 and a kitchen worker’s bonus of $7,700, the report says.

A public outcry erupted over executive compensation in March when news broke that AIG had doled out at least $165 million in executive bonus pay after being awarded $180 billion in taxpayer loans and incentives.

The aid was part of the federal government’s $700 billion TARP bailout, created last autumn as an emergency stopgap to stabilize the nation’s wobbly economy in the midst of the worst recession since the 1930s.

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