Credit Crunch

12/02/2009   U.K. Investigates AIG Financial Products dated 12/02/2009

Origin: Business Insurance Europe February 12th 2009

LONDON—The U.K.’s Serious Fraud Office has launched a preliminary inquiry into the operations of AIG Financial Products Corp., which is a subsidiary of American International Group Inc., the SFO announced Thursday.

“It is right for us to look into the U.K. operations of AIG Financial Products Corp., to determine if there has been criminal conduct,” Richard Alderman, director of the SFO, said in a statement announcing the probe. “We will use our full range of powers to seek information and to speak to those with an inside knowledge of the company’s operations.”

In the same statement, the SFO said it was cooperating with U.S. authorities that are conducting their own investigations and with the U.K.’s Financial Services Authority. “SFO’s inquiry does not concern the insurance operations of AIG in the U.K. or elsewhere,” the statement said.

“AIG Financial Products Corp. and AIG are cooperating with the SFO and have offered their assistance to the SFO as it conducts its inquiry,” the SFO said.

New York-based AIG issued its own statement vowing to “cooperate fully” with the SFO.

“AIG understands that the SFO’s inquiry is not related to AIG’s foreign or domestic insurance businesses,” said the statement. “As previously disclosed, AIG began the process of unwinding certain of AIGFP’s and its subsidiaries’ businesses and portfolios, including those in the U.K., late last year.”

AIG’s Financial Products Corp.’s activities in the credit default swap market are blamed for the near-collapse of AIG. The federal government subsequently attempted to bail out AIG, assuming a nearly 80% ownership stake in the company.