New York State Attorney General, Andrew Cuomo, may chase down payments already made to top executives and cancel planned compensation payouts at the failed insurer, American International Group, as part of a pact agreed upon by the firm’s new leader.

AIG, one of the companies at the centre of the recent US market collapse, has agreed to assist Attorney Cuomo’s office in recovering any “illegal expenditures”.

“This includes all forms of compensation paid to former chief executive Martin Sullivan and the former head of the Financial Products Unit, Joseph Cassano,” Mr Cuomo said in a statement.
 
The New York Attorney General also confirmed AIG would stop any payments pursuant to “the multi-million dollar employment agreement” of Steven Bensinger, the company’s chief financial officer, who will be leaving AIG.

“These actions are not intended to jeopardize the hard-earned compensation of the vast majority of AIG’s employees, including retention and severance arrangements, who are essential to rebuilding AIG and the economy of New York,” Mr Cuomo said.

Mr Cuomo also had Edward Liddy, the new chairman and CEO of AIG, agree to implement controls at board level to prevent any future unwarranted expenditures, “…such as salaries, bonuses, stock options, severance payments, gratuities, benefits, junkets, and perks.”

Mr Liddy also agreed to immediately cancelling more than 160 planned conferences and events, some exceeding more than $750,00 per event, for a total savings of more than $8 million.

“We’re very grateful for the guidance of Attorney General Cuomo,” said Mr Liddy. “We know that the Attorney General shares our commitment to rebuilding AIG’s business and paying back the US taxpayer.”