Wednesday, October 8, 2008

AIG Junket just days after Bailout, Spas, Dinners and golf.

When the going gets tough, the tough get pedicures.

Just days after the federal government committed $85 billion of taxpayers' money to a bailout of insurance giant AIG last month, senior execs from the troubled company headed to Southern California's ultra-swanky St. Regis Resort in Monarch Beach for a week of wining and dining top salespeople.

"They had a conference here," resort spokeswoman Kristi Turek confirmed Tuesday, "but we don't get into details of what they did during that time."

As it happens, congressional investigators released AIG documents earlier in the day showing that the company paid more than $440,000 for the event, including nearly $200,000 for rooms, $150,000 for meals, $23,000 in spa charges and almost $7,000 for golf outings.

The post-bailout getaway for American International Group execs is just one of a series of jaw-dropping revelations to emerge this week about the behavior of some of the companies involved in the financial crisis.

Among other things we now know:

* AIG tried to hide negative information about its condition from auditors before the bailout plan took shape, according to documents obtained by Rep. Henry Waxman (D-Beverly Hills), who heads the House Oversight and Government Reform Committee.

* As early as March, regulators sent a letter to AIG warning the company about its lack of transparency and ability to oversee financial products.

* Just days before Lehman Bros. Holding Inc. filed for bankruptcy protection last month, the company altered its executive pay plan to give senior managers multimillion-dollar bonuses regardless of recent losses.

* Joseph Cassano, the Lehman exec in charge of the company's financial products division, received more than $280 million over the last eight years, according to Waxman. Even after he was shown the door in February, Cassano was placed on a $1 million-a-month consulting retainer.

"This is the new Enron," said Gonzalo Freixes, a professor at UCLA's Anderson School of Management who specializes in business ethics. "A lot of people probably thought we were past this kind of thing."

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