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Sins of the Son

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It’s unlikely that Jeff Greenberg would have had any direct role in these activities, given the timing of his ascent to the position of CEO. In fact, he is barely even mentioned in Spitzer’s complaint. (Marsh & McLennan declined to comment, and efforts to reach Greenberg were unsuccessful.) Still, the alleged wrongdoing appears to have accelerated on his watch, whether or not he had anything to do with it. According to a former top executive in a Marsh & McLennan subsidiary who interacted with Jeff on a periodic basis, news of Jeff’s appointment split Marsh & McLennan’s executive ranks into two camps: “There was a camp that felt it was a good thing to occur”—the thinking being that the Marsh & McLennan management had become too inbred and stagnant—“and there was a camp that was concerned about the Greenberg reputation, whether or not he would destroy the culture there.” In particular, says this executive, the fear was that Jeff would try to run Marsh & McLennan like an insurance company, where employees are more expendable because the company rises or falls on its financial assets, rather than as a professional-services firm, where “human assets are more important than the balance sheet.”

What the company got, in the end, was a little of both. Jeff went at the job like a man with something to prove, very quickly trying to raise the company’s profile by recruiting executives from top investment banks. But, culturally, Jeff seemed to make the company more like the insurance world he’d grown up in. “He was trying to, in his own way, be a new CEO, to shake things up,” says this same executive. At times he was “extremely demanding, just like his father.” Another former top Marsh & McLennan executive puts it this way: “People at AIG perform, and to some extent live a little of life in fear, wondering, ‘If I don’t deliver in this quarter, I’m on the street.’ . . . It’s much more binary, black-and-white, than Marsh would have been.” But this changed once Jeff arrived. “There was more leeway in the old Marsh . . . [Jeff’s] very aggressive.”

According to this same executive, the new aggressiveness created anxiety in the upper ranks of the company. “That may have caused some of the issues. People were scared to death of losing [their jobs]. Once you’re at Marsh, the feeling is that Marsh is the No. 1 broker. If you fail there,” your only option is to go work at an inferior firm. The Wall Street Journal reported that Roger Egan, president and chief operating officer of the company’s brokerage division, once told his managers, “Each time I see Jeff, I feel like I have a bull’s-eye on my forehead.” The company denies that Egan made the statement. But one of the former executives believes it rings true. “That wouldn’t surprise me,” says the executive. “All of a sudden, there’s a gigantic shift; you panic.”

This in itself is not necessarily a recipe for disaster. But if fear is going to be a primary motivating tool, as it is for Hank, you’d better make sure you know what’s going on at every level of the company, so that it’s not driving people to do things that could blow up in your face. Hank accomplishes this, to some extent, by micromanaging his company. The AIG executive holds annual meetings with the heads of each of his company’s divisions, where he and the executives go line by line over the division’s budget. Hank is also notorious for placing phone calls to unsuspecting executives multiple levels below him in the corporate hierarchy in an attempt to gather intelligence. Jeff, by contrast, was much more of a hands-off manager. “There was only one time in my whole career when I saw Jeff drop down into operations,” recalls one of the former Marsh & McLennan executives. Every one of the handful of former Marsh & McLennan executives I spoke with agreed that Jeff was unlikely to have had any knowledge of the bid-rigging activity. “I personally don’t think that Jeff knew anything at all about what was going on,” says one. But, adds another, “there’s no question there was a willful ignorance at Marsh. There were plenty of explosions along the way” that should have set off alarm bells.

Jeff also failed in another way in which his father excelled: his ability to take the necessary precautions when he felt he might be brushing up against a legal or ethical line. AIG is alleged to have participated in some of the kickback and bid-rigging schemes that Marsh & McLennan organized, but Hank took two crucial steps that are likely to salvage both his company’s reputation and its stock price. First, as early as 2002, AIG approached the New York State insurance superintendent complaining that it was being pressured by Marsh & McLennan to pay large commissions and asking for an investigation into the matter (even as it continued to pay them). Then, after Spitzer announced his investigation of the insurance industry in April, Hank launched his own internal investigation into the bid-rigging allegations, which resulted in charges being brought against two mid-level employees last month.

Marsh & McLennan, by contrast, kept insisting through its general counsel, William Rosoff, that it had done nothing wrong—right up until the day Spitzer filed his complaint with the State Supreme Court. It’s possible that Rosoff was acting on his own, without direction from Jeff Greenberg. But that wasn’t the assumption Spitzer’s lawyers worked under. “It would be weird, an anomaly, if [Marsh & McLennan’s] general counsel was setting the tone, deciding things,” says one Spitzer official.

The contrast here is almost poignant. In September, Spitzer’s office began lobbing subpoenas at the insurance industry, soliciting documents and asking to speak to executives with knowledge of certain activities; this is in part a ploy to get information from one company that will be useful in a case against another. The subpoenas came affixed with a two-week deadline, something companies typically see as a subject for negotiation. (Though less so in this particular case, under this particular attorney general.) “It’s less formalistic than you imagine,” says the official. “You send these things out, you get calls, ‘What is this? What do you want? When do you want it?’ ” As it happens, two of the first companies to respond with information about Marsh & McLennan—safely ahead of the deadline—were AIG and ACE, which Evan now runs. What might have prompted their swift cooperation? The official won’t comment specifically about the Marsh & McLennan investigation. But he allows that “what happens in situations like this is, prosecutors try to set up a race to come in. The first people in tend to get the most credit. It’s not a surprise if the recipients of the subpoenas vie with each other to see who can be first.”

In rushing to implicate Marsh & McLennan, executives at AIG and ACE may have been merely acting to protect themselves from Spitzer, the big bad wolf of corporate America. But does the fact that each of the three CEOs were Greenbergs, playing out parts in a long-running family drama, have anything to do with it?

It can’t be dismissed out of hand. Says one analyst who follows AIG, “[Hank’s] such a fierce competitor. If someone leaves, they’re a traitor. If you become a competitor, even worse.” Being his son does not, apparently, qualify as an exemption. It’s too bad Jeff never entirely learned to play the game this way.


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