Down...But Not Out

Nowhere is Greenberg's standing more firm than in China, where the forerunner company to AIG was founded in 1919 in Shanghai by the most important figure in his career, Cornelius Vander Starr, who hired Greenberg in 1960. Even though AIG had to shut down its operations in China in 1950 after the communists took over, Greenberg never lost sight of those roots and was thrilled when his company in 1998 reclaimed one of its original offices on the Bund in Shanghai. Ahead of most, he understood the vast economic potential of China and advocated for better relations to every U.S. President since Kennedy.

He has played a lead role in promoting China's capitalist transition, serving as chairman of the Asia Society and chairman of the U.S.-China Business Council, and creating and chairing the International Business Leaders' Advisory Council in Shanghai. The Chinese remain so enamored of Greenberg that this year they honored him with their prestigious Marco Polo Prize for promoting Sino-American relations. "Hank Greenberg is perhaps the best known and most admired American businessman at both top government and top business levels in [India and China]," says Peter G. Peterson, who was an economic adviser to Richard Nixon and has known Greenberg for years.

Maurice Raymond Greenberg was born in New York City on May 4, 1925, the son of a cabdriver. His obsessive desire to reach the top and stay there may be rooted in a once-poor kid's inferiority complex. His father died in a car accident when he was only 6. His mother, a manicurist, remarried and moved to a dairy farm near the Catskill Mountains of New York. On the farm, he had daily chores that included milking the cows twice a day. Greenberg soon proved his talents and his competitive drive. He was a starting football player--his athletic ability earned him the nickname Hank, after the baseball great of that era with the same name. He quit school to go to war in 1942 and, after his battalion landed on Omaha Beach under fire, went on to liberate the Dachau concentration camp. After the war, he finished high school supported only by the "52-20" unemployment package for ex-G.I.s: $20 a week for a year.

His time in the service reinforced his instinctive sense of discipline. But it also reinforced that those smart enough to work the system could get special rewards. As a new recruit in London during World War II, he frequently took advantage of a policy that gave soldiers an extra day off if, instead of boozing it up at the pubs, they enjoyed a night of culture at the theater. Greenberg's tactic: buy a ticket, grab a playbill, walk in the front door--and right out the side door.

Of course, cutting corners to get an extra day with a lady friend, as was the case in London, is one thing. But now Greenberg faces serious charges of cutting corners to make AIG's financial might appear greater than reality, and in so doing ripping off shareholders who have lost nearly $50 billion in the value of their stock since Spitzer served the first subpoena. In Spitzer's suit, he alleges that AIG, through bogus transactions, inflated the reserves it keeps to pay claims by hundreds of millions of dollars; that Greenberg repeatedly directed AIG traders late in the day to buy AIG shares to prop up its price; and that AIG booked underwriting losses as investment losses to project a healthier core business.