March 23, 2007

Hank Greenberg Routs Eliot Spitzer; Wall Street Journal Almost Alone in Noting

From a Friday subscription-only editorial:

Eliot Spitzer has moved to greener pastures, if that’s what you call Albany. But there are still a few messes to clean up from the New York Governor’s stint as Attorney General — such as the truth about some of his prosecutorial targets.

One of those is Maurice “Hank” Greenberg, whom Mr. Spitzer drove from his job as head of AIG while branding him a criminal. One of his smears accused Mr. Greenberg of bilking the Starr Foundation, a New York charity. A report released this month by an independent committee exonerates Mr. Greenberg of that charge, even as new facts have emerged about Mr. Spitzer’s nasty prosecutorial methods.

….. Mr. Spitzer’s Starr “report” claimed that Mr. Greenberg had benefited from “self dealing” in handling the estate of Cornelius Vander Starr, AIG’s founder. The accusations dealt with 37-year-old transactions that every relevant authority had approved at the time — including the then Attorney General, the IRS and a New York state court. Mr. Spitzer filed no official charges; he simply dumped his smears on the media, which gave them prominent play.

We now know this was merely one more hardball attempt to bludgeon Mr. Greenberg into settling the unrelated AIG charges. Sources who were part of the discussions at the time now say that Mr. Spitzer made clear that, unless Mr. Greenberg admitted guilt in the AIG case and personally wrote a check for north of $500 million, the AG would go public with the Starr allegations.

Mr. Greenberg refused, and the Starr smear was released. A spokesman for Mr. Spitzer says, “we categorically deny that Mr. Spitzer attempted to blackmail Mr. Greenberg or his legal team into a settlement.” We’ll let our readers decide whom they believe.

For its part, the Starr Foundation board asked a three-person committee, including two former judges not affiliated with the Foundation, to evaluate Mr. Spitzer’s charges. Its 179-page report, released earlier this month, concludes that “the allegations against [Mr. Greenberg and other executors] are unfounded.” In fact, thanks to the Starr Foundation’s investment in AIG stock, its assets have grown to more than $3 billion today from $1.3 million in 1968.

This report and other legal fees cost Starr $4 million, which is more than the philanthropy’s annual administrative expenses, and millions less than it spends on grants to improve New York City. Few of our readers will be surprised to learn that the committee’s exoneration of Mr. Greenberg received far less publicity than the original accusations.

Mr. Greenberg is fortunate in that he is wealthy enough to defend himself ….. Mr. Spitzer and his former gang of bully boys in the AG’s office owe Mr. Greenberg and the Starr Foundation an apology.

Dream on. Being Eliot Spitzer means never having to say you’re sorry — and never having to worry about whether the Formerly Mainstream Media will cover your setbacks. After all, how many people besides the faithful Wall Street Journal editorial readers have any idea that Greenbergy just whipped Spitzer bigtime — over a week ago?

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