After a $85 billion federal bailout, you might be tempted to hold a retreat in an exclusive California resort, and that’s what American International Group executives did.
Recently, the committee on Oversight and Government Reform held a hearing to investigate the world’s largest insurance company meltdown. The committee aimed at discussing the regulatory mistakes and financial excesses that paved the way to AIG’s federal bailout.
One of the key item discussed was AIG’s spending of no less than $442,000 for a corporate retreat at the ST. Regis Monarch Beach resort in Dana Point, California, south of Los Angeles. This original amount was spent on Sept. 22, a week after the Federal Reserve attributed an $85 billion emergency loan to AIG in order to keep the company afloat, avoiding bankruptcy due to insurance liabilities.
The receipt from the St. Regis resort revealed that the eight-day company retreat was extravagant. Indeed, about $139,000 was spent on hotel rooms, and a staggering $147,000 was spent on banquets. Another $23,400 was spent on undisclosed spa treatments and another $6,950 was spent on the golf course. Don’t forget the $10,000 spent on room service, food and cocktails at the hotel lounge.
Following these revelations, AIG issued a statement saying that "This type of gathering is standard practice in the industry and was planned a year advance of the Federal Reserve’s loan to AIG. We recognize, however, that even activities that have long been considered standard practice may be perceived negatively. As a result, we are re-evaluating various aspects of our operations in light of the new times in which we operate."
Still according to the statement, AIG claims that the event was held by an insurance subsidiary, not AIG executives. The participants were independent life insurance agents who were "top business producers" for AIG. Only about 10% of participants were AIG American General employees, and no corporate executives from AIG headquarters attended the retreat, according to the statement.
Still one can wonder if this expenditure could not have been scaled back in the light of the company’s Federal bailout.