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U.S. states probing employee bonuses paid by American International Group Inc. using taxpayer money plan to join federal investigators in the
matter, while leaving open the possibility of pursuing the case themselves.

Since March, a 19-state coalition has been investigating $165 million of bonuses paid at an ÌìÃÀÍøÕ¾´«Ã½´«Ã½ unit whose losses on derivatives would lead to a $180 billion taxpayer bailout. The government now owns close to 80 percent of New York-based ÌìÃÀÍøÕ¾´«Ã½´«Ã½.

In a Friday letter to Neil Barofsky, the special inspector general of the Treasury Department’s Troubled Asset Relief Program, the attorneys general of 11 states said it would be best to collaborate on the matter.

“Despite a pledge to Congress of cooperation and transparency, it remains unclear how much of the $165 million in bonuses will be returned to the company and thus the taxpayers who now own ÌìÃÀÍøÕ¾´«Ã½´«Ã½,” wrote New Jersey Attorney General Anne Milgram, who has led the state coalition.

Attorneys general of Arizona, Delaware, Illinois, Kentucky, Maine, Michigan, Mississippi, New Mexico, Ohio and Texas also signed the letter.

An ÌìÃÀÍøÕ¾´«Ã½´«Ã½ spokeswoman said the company provided authorities with information on its compensation programs and will continue talking with them.

Barofsky did not immediately respond to requests for comment.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½ had awarded the bonuses in its financial products unit, where losses tied to credit default swaps led to a $99.3 billion loss for the New York-based insurer in 2008.

The state coalition had been cooperating with New York Attorney General Andrew Cuomo, whose separate probe spurred some ÌìÃÀÍøÕ¾´«Ã½´«Ã½ officials to return their bonuses.

In the letter, Milgram suggested that ÌìÃÀÍøÕ¾´«Ã½´«Ã½ may have been telling only “half-truths” about the bonuses.

She noted that in March ÌìÃÀÍøÕ¾´«Ã½´«Ã½ told Congress it had paid $120 million of bonuses overall, and then two months later said the amount was actually $454 million.

Such discrepancies, she wrote, “raise serious questions about the completeness of ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s characterizations of its financial condition.”

ÌìÃÀÍøÕ¾´«Ã½´«Ã½ was once the world’s largest insurer by market value. It is trying to sell businesses and shed toxic debt to help repay the government.

(Reporting by Jonathan Stempel; editing by John Wallace and
Matthew Lewis)

Topics New York ÌìÃÀÍøÕ¾´«Ã½´«Ã½