Insurance giant AIG, under fire for spending $440,000 on a week-long luxury retreat for its brokers less than a week after receiving an $85 billion government bailout, has cancelled a second retreat that was planned for the same brokers this week at the Ritz-Carlton Resort in Half Moon Bay, Calif.
AIG Chairman and CEO Edward M. Liddy announced the cancellation last week in a letter to U.S. Treasury Secretary Henry M. Paulson, in which he attempted to clarify the circumstances surrounding the company's controversial events. According to Liddy, the events have been mischaracterized as "executive retreats" organized by AIG when, in fact, they are gatherings for top-producing independent life insurance agents held by an AIG subsidiary. Such events are "standard industry practice," Liddy said, pointing out that only 10 AIG employees—and no AIG executives—attended the September event at the St. Regis Resort in Monarch Beach, Calif., which was planned months before the government loaned the company $85 billion to stave off bankruptcy, but which was held just days after.
"We owe our employees and the American public new standards and approaches," Liddy wrote in his letter to Paulson, promising that AIG is "reevaluating the costs of all aspects of our operations in light of the new circumstances in which we are all operating."
As early as Oct. 8—when AIG asked the Federal Reserve for a second loan, in the amount of $37.8 billion—AIG had said it would continue with this week's Ritz-Carlton event. Meanwhile, at least one member of Congress applauded AIG's decision to finally cancel it.
"I am somewhat relieved to hear that AIG has canceled their Ritz-Carlton conference, which was nothing less than a slap in the face of the American people," said Rep. Elijah Cummings (D-MD). "I cannot fathom how in the same day—the very same day—that AIG asked the government for another $37.8 billion loan, the company would even consider moving forward with plans to host another large conference at another luxury resort."
Although the Ritz-Carlton event has been cancelled, AIG will likely have to pay cancellation fees to the resort, according to a spokesperson, who told ABC News last week, "We'll certainly lose some money in cancellation fees, but it's just beyond the point of trying to conduct these meetings given the uncertainty that's taking place."