Down...But Not Out

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Judging from his daily routine, you'd hardly know that Hank Greenberg's life has been turned inside out. Sure, he works in a makeshift office on Park Avenue, with boxes piled as deep as the lawyers outside his door and with the nasty business of potential indictments--not insurance--front of mind. But the man who over four decades built and ran American International Group, the global insurance giant, is as focused as ever. He still manages two AIG offshoots, Starr International and C.V. Starr, investment firms that control billions of dollars of AIG stock. He's a regular on the Manhattan dinner circuit, where society's glitterati greet him warmly. He works out daily with the same discipline that guided his long career. The only thing that's changed is the way the 80-year-old does his daily push-ups: using a "slow burn" strategy of fewer repetitions but a painstaking pace.

Yet Greenberg is in deep trouble. State and federal investigators have been poring over AIG's books for months. Greenberg's own board--led by longtime peer and pal Frank Zarb, who for years was his quietly designated successor should the worst happen--lost faith and pushed him to resign, first as CEO and then as chairman, in March. New York State Attorney General Eliot Spitzer filed civil fraud charges in May, accusing Greenberg of orchestrating "sham transactions" that hid losses and inflated AIG's net worth. Just last week he resigned from AIG's board, ending his last official tie to the company--the same week two executives at General Re, a unit of Warren Buffett's Berkshire Hathaway that did business with AIG, pleaded guilty to civil fraud charges that name Greenberg as a co-conspirator.

How did a man revered by government leaders and CEOs around the globe fall so far, so fast? Multiple investigations continue, and criminal charges have not been ruled out. Greenberg, who on advice from his attorneys declined to comment, has denied any fraudulent conduct and vowed to fight for his name. Months ago, he famously derided regulators' concerns as inconsequential "foot faults." Say this about him: he's never lacked for confidence. It's said that he once hopped into his limo after a board meeting and, when the driver asked where to go, responded, "Take me anywhere--everybody needs me." But for the foreseeable future, he will be spending a lot of time with his lawyers.

Is Greenberg really a power-hungry crook who would do anything to win--and who was bound to be discovered as his deceits escalated? Or is he a quintessential hard-driving businessman so used to winning and so sure of his judgment that he didn't notice how close his toes had got to the line? Spitzer has been criticized in the business community for overzealousness, and last week brought the first hard evidence that the criticism may have merit: a former Bank of America broker was acquitted in a courtroom test of Spitzer's crusade against the financial industry. That can't help pleasing Greenberg's lawyers. Still, Greenberg's hardheadedness may have invited some of the scrutiny he's under. In the end, his legal and professional predicament may be as much about his personality as his actions.