$1M Bonuses Paid to AIG's Mayfair Toxic Debts Team

The Evening Standard (London, England), March 16, 2009 | Go to article overview

$1M Bonuses Paid to AIG's Mayfair Toxic Debts Team


Byline: ROBERT LEA

BANKERS at AIG's disgraced Mayfair operations -- dubbed the Ground Zero of the financial crisis -- are receiving $1 million bonuses.

The payouts came despite the AIG Financial Products division losing $40.5 billion ([pounds sterling]28.6 billion) last year, triggering the collapse of the insurer and a subsequent bailout by the American taxpayer.

Documentation forced into the open by US Congressional pressure reveals that at least seven executives are picking up more than $3 million at the division of what was at one time the world's biggest insurance company.

AIG, which has received $150 billion from the US government since September last year, is making payments of $450 million to 400 staffers.

Those payments are going to employees in AIG Financial Products, the part of the insurer that crippled the company by making huge losses on the toxic derivatives that have brought the world financial system to its knees.

Rather than calling the payouts bonuses, the insurer -- which announced a record fourth-quarter loss of $61.7 billion on 2 March -- is labelling them "retention" payments.

In London, AIG Financial Products worked in the heart of the Mayfair hedge fund industry, sharing an impressive building with GLG Partners, London's biggest independent hedge fund manager.

AIG's Mayfair office specialised in the trading of the derivatives known as credit default swaps, the insurance that lenders take out to make sure their debts do not go bad, but the market imploded in the credit crunch, leaving AIG with liabilities running into tens of billions of dollars.

The Mayfair operation was run by controversial financier Joe Cassano, whose departure from AIG's London office a year ago heralded the collapse of the division.

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