The fight over a secretive entity that wields enormous influence over AIG is just starting.

The fight over a secretive entity that wields enormous influence over AIG is just starting

There’s probably never been anything like this in U.S. corporate history: a titanic legal struggle pitting the interests of corporate governance and public shareholders against those of a private company and the rights of its owners.

At the pinnacle of his power, Maurice “Hank” Greenberg didn’t just control American International Group Inc., the insurance and financial services giant. He also sat atop Starr International Co. (SICO), the tightly controlled private company that, in a complex link to AIG, doled out compensation to top AIG execs. It controls 12% of AIG shares, worth some $17 billion.

Now, as the Securities & Exchange Commission and New York Attorney General Eliot Spitzer probe deeper into AIG’s accounting practices, a bizarre power struggle is emerging. Spitzer wants broad access to the records of SICO, arguing that its operations were so intertwined with those of AIG that they were all but indistinguishable. And although Greenberg moved to negotiate some access to disputed SICO documents on Apr. 6, according to a source close to the company, an intense fight could still loom over investigators’ jurisdiction — and, ultimately, over control of the assets in SICO. Spitzer is marching into battle under the banner of protecting public shareholders; Greenberg is likely to defend his interests on the grounds that SICO is a private company.

Greenberg, who was forced out of AIG as CEO and chairman on Mar. 14 and Mar. 28, respectively, set the stage for a showdown with regulators on Mar. 25 when his lawyers removed 80 boxes of SICO documents in the middle of the night from Bermuda offices shared by AIG and SICO.

Greenberg’s lawyer, David Boies, later defended the move as an attempt to “protect” the documents from destruction.