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 | | From: | Daffy Duck | | Subject: | $790m offer puts ball in Spitzer's court | | Date: | Sun, 16 Jan 2005 13:51:28 -0500 |
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 | From:
http://afr.com/articles/2005/01/16/1105810772009.html
$790m offer puts ball in Spitzer's court
Jan 17
Wall St Journal
Marsh & McLennan Companies has offered to pay $US600million ($790million) to
settle insurance bid-rigging allegations levelled by New York State's
Attorney-General, Eliot Spitzer.
But his office has sought $US750million and a public statement of contrition
as part of a pact that is expected to be made final this month, according to
people familiar with the matter.
Negotiations between state officials and representatives of the New York
financial services company have moved forward quickly and a pact could be
struck as soon as this week. It was previously known that a settlement could
be more than $US500million.
But the insiders said Marsh & McLennan has bristled at the potential
statement of contrition for alleged wrongdoings at Marsh Inc, the company's
insurance brokerage unit and the world's biggest middleman between insurers
and corporate buyers.
Marsh contends such a statement could leave individuals or the company
vulnerable in litigation from shareholders and other states' regulators.
The talks are expected to resume in this week.
Mr Spitzer and Marsh chief executive Michael Cherkasky, formerly head of
Marsh Kroll, the firm's investigative unit, and Mr Spitzer's boss in the
Manhattan district attorney's office at one time, are both expected to
return from business trips.
Mr Cherkasky had pushed for a quick settlement last year and now is eager to
put the matter to bed by month's end. He has contacted the
Attorney-General's offices several times to help speed the process.
The 134-year-old firm has been reeling since MrSpitzer filed his civil fraud
lawsuit on October 14, alleging the Marsh brokerage firm cheated corporate
clients by rigging bids for insurance contracts and steering business to
insurers who paid Marsh hundreds of millions annually in "contingent
commissions".
Mr Spitzer likened these commissions, which totalled $US845million of
Marsh's total 2003 revenue of $US11.6billion, to kickbacks.
Since the lawsuit was filed, Marsh has replaced nearly all of its senior
management, sworn off the lucrative contingent commissions, pared all but
one management representative from its board and laid off 3000 employees.
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