AIG case sees first guilty plea, General Re exec

Former General Re executive John Houldsworth has plead guilty to one count of conspiracy regarding the accounting investigations into American International Group (AGI). Houldsworth, a former executive at Berkshire Hathaway’s General Re unit and former chief executive of Gen Re’s Cologne Re Dublin unit in Ireland, admitted his criminal role in conspiring to misstate AIG’s financial statements, according to Houldsworth’s lawyer Larry Byrne.Houldsworth, recently placed on paid leave from General Re, represents the first guilty plea in the AIG investigations. According to Bryne, Houldsworth, who was informed in May 2005 that the Securities and Exchange Commission (SEC) was considering taking legal action against him, will remain fully compliant with investigations lead by the SEC and the Department of Justice (DOJ).In its complaint based on evidence derived from detailed conversations focusing on AIG transactions the SEC claimed that some Gen Re executives provided AIG with $500 million in reserves in 4-Q 2000 and 1-Q 2001 by arranging sham reinsurance transactions on a no-risk basis. These false transactions misrepresented AIG’s financial picture, creating a false view of loss reserves that did not reflect the true declines in reserves for 4-Q 2000 and 1-Q 2001. The SEC claims that anyone involved in the AIG transactions knew they were creating “sham” documents that would allow AIG to falsify its accounts.