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Greenberg (pg. 4)

By James Bandler, editor at large, with Roddy Boyd and Doris Burke
Last Updated: October 7, 2008: 10:10 AM ET

At his modest three-bedroom apartment in Switzerland, Greenberg could barely contain his anger at the directors. For years he had helped them out, backed their candidacies for nonprofits, sent millions of dollars to their charities, entertained them at the founder's estate in Brewster, N.Y. Greenberg couldn't bear the idea of leaving AIG. It was his identity. But if he didn't quit, would he be pushed?

He took a walk with his wife, Corinne, up a snow-packed trail through a cavern of pines, their boots crunching in the snow as their Maltese, Snowball, trotted beside them. Greenberg's head finally cleared.

Back at the apartment he called Boies. "I want you to draft my letter of resignation," Greenberg said.

But of course he wasn't done. He was still chairman of SICO. Two days later he started firing back. He purged SICO's board of any directors who had allegiance to AIG. Greenberg ended SICO's participation in AIG's deferred-compensation plan and declared that the SICO money would instead be used to fund a new global charity. Greenberg's companies and AIG exchanged lawsuits like rifle fire: SICO demanded that AIG return art it had seized; AIG demanded that Greenberg and his allies give back the millions of SICO shares that the company said Greenberg had. It was war.

***

Greenberg's command center for the first year was a conference room on the 18th floor of Boies Schiller & Flexner's old Lexington Avenue office. A phone bank was manned nearly around the clock to take calls from the peripatetic Greenberg as he jetted across time zones. Corinne Greenberg enforced strict dietary rules. No junk food - this war room ran on lobster salads.

Greenberg's team was led by Boies, one of the most celebrated trial lawyers of the day. Boies held an annual craps tutorial for associates at his Armonk, N.Y., home, using the game to judge how his young lawyers handled pressure. Craps, a mathematical game, was, in Boies's mind, a lot like insurance and, for that matter, litigation: It was all about managing risk. Over the next three and a half years, Boies and Greenberg forged a deep friendship, and the lawyer became Greenberg's closest advisor. Boies figures he has spent 60% to 70% of his time on Greenberg's legal issues in 2008. Greenberg and his associates have spent an estimated $230 million on legal bills.

Greenberg went through so many publicists that a senior partner at one global media firm likened the job to that of the drummers in the movie This Is Spinal Tap, who continually die off mysteriously. Greenberg is now working with his eighth public relations firm. "It is sad," says one fired advisor. "He has all these people who are feeding off his desire for revenge. He wants his reputation back."

In April 2006, Greenberg's team was joined by Karen Webster, managing director of eSapience, a little-known media and research firm based in Cambridge, Mass. She proposed launching a massive rehabilitation effort. Greenberg's people were interested. They had been confounded by their inability to get most business journalists to even consider the possibility that he was innocent.

Rather than go directly to the media to make Greenberg's case, Webster suggested a subtler strategy, one that would target "influentials" - public intellectuals, policymakers, and advisors who affect debate. The goal, as outlined in a business plan, would be to "change the public conversation about Maurice Greenberg" by highlighting his accomplishments and positioning him "as a visible and highly credible voice about public issues on a small set of issues that are completely unrelated to his legal situation."

Greenberg and his lawyers agreed to pay $100,000 for the plan.

The eSapience team included Richard Schmalensee, then the dean of MIT's Sloan School, and Webster's husband, David Evans, a law professor. Those academics, the plan said, were highly regarded by the public and their peers as independent-minded. "Because they are not 'hired guns,' they are influential and listened to," the plan continued.

But academics who aren't "hired guns" still need to be paid. They billed Greenberg's team between $400 and $1,000 an hour for their services. Not everyone liked the arrangement. Howard Opinsky, Greenberg's main media strategist, objected "quite strenuously" to the eSapience plan. "I didn't think it was appropriate," he said. "The way it was explained to me and from what I saw, they had a stable of people they paid to write positive things. Which wasn't ethical."

The eSapience team created two scholarly sounding think tanks out of whole cloth: the Barbon Institute, named after Nicholas Barbon, the 17th-century father of fire insurance; and the eSapience Center for Law and Business. They organized a big conference at New York City's St. Regis Hotel, where Greenberg spoke about the need for government and insurance industry cooperation to prepare for terrorist attacks.

When eSapience's bills - nearly $500,000 a month - started coming in, Greenberg threw a fit and stopped paying. Then eSapience sued, and much to the embarrassment of everyone, the lawsuit became a subject for the Boston Globe.

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