Home > corporate governance, corruption, obama > Obama Appointee Richard Holbrooke as an AIG Director

Obama Appointee Richard Holbrooke as an AIG Director

March 24th, 2009 Leave a comment Go to comments

Richard Painter writes at VC:

When I was at the White House, we looked carefully at corporate directorships. Membership on the board of a company with serious corporate governance problems was a strike against a potential nominee….

How then could a high ranking position it the State Department in 2009 go to Richard Holbrooke who was a director of AIG between 2001 and 2008, who was on AIG’s compensation committee, and who resigned from AIG in the summer of 2008 just as things were falling apart? Holbrooke is a talented if controversial diplomat with a track record in Kosovo, and he brings this experience to his present position as liaison between the United States and parties interested in the War in Afghanistan. Nonetheless, news reports suggest that the White House did not think about AIG when appointing Holbrooke, and did not consider whether a man who could not keep AIG’s risk prone management in check can effectively deal with a geographic region riddled with corruption, not to mention Al Queda and the Taliban.

And there is more. Holbrooke left the Clinton Administration for investment banking. The Department of Justice Public Integrity Division later charged that he violated post-employment conflict of interest rules by representing back to the State Department on behalf of an investment bank. The charges were settled with payment of a $5,000 fine. Details are in an August 14, 2000 memo titled 1999 Conflict of Interest Prosecution Survey sent by the Office of Government Ethics to designated agency ethics officials:

http://www.cs.indiana.edu/sudoc/image_32000000478091/32000000478091/DAEOGRAM/00/Do00029.pdf

In 2001 Holbrooke became a director of AIG. According to the Associated Press, SEC filings indicate that AIG paid Holbrooke hundreds of thousands of dollars in cash and stock in 2006 and 2007 (2008 compensation figures are not yet available).

Also:

AIG and the until recently AIG-affiliated Starr Foundation contributed a lot of money over several years to the American Academy in Berlin, itself a good cause. Dig deeper, however, and one finds that the American Academy was founded by none other than Holbrooke who also served as its Chairman. Is it pure coincidence that Holbrooke was one of AIG ‘s outside directors who helped decided how much money AIG’s senior executives got paid? Conflicts of interest of this sort are not per se illegal (perhaps they should be) but they do not reflect well on corporations or the directors who run them.

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