Jan 28 (Westlaw Journals) - A Delaware state court judge has approved a $90 million settlement of American International Group shareholder suits alleging ex-CEO Maurice Greenberg and his lieutenants nearly brought down the insurance giant with fraudulent accounting schemes.  

The global pact, funded by AIG's insurers, settles suits brought on behalf of the company in New York and Delaware and is part of a larger settlement of the various legal actions sparked by AIG's near collapse after Greenberg was ousted in 2005.  

On the brink of bankruptcy in September 2008, during the subprime mortgage meltdown that triggered a Wall Street collapse, AIG received more than $182 billion from the federal government to stay afloat.  

At a Jan. 25 hearing, Vice Chancellor Leo Strine also awarded more than $21 million in attorney fees to the plaintiff lawyers for the benefit they created for the shareholders.  

Since the shareholders brought the suits derivatively — that is, on behalf of the company — the $90 million goes back into the company coffers.    

In a statement to the press, an AIG spokesman said the company is "pleased that the court has approved the settlement."  

The settlement papers noted that Greenberg and his lieutenants paid nothing toward the settlement and in fact won $60 million in a related pact with AIG to cover their legal expenses.  

Companies like AIG that incorporate in Delaware agree to pay the legal bills of their officers and directors for litigation and investigations related to their corporate positions.  

Throughout the six-year litigation, Greenberg maintained that AIG's fiscal troubles were not the result of his policies and actions; rather, officers who succeeded him recklessly bet AIG's future on exotic securities based on subprime mortgages and then hid their mounting losses, he said.  

Shareholders had charged in the Chancery Court suit that Greenberg, ex-CFO Howard Smith, and former vice chairmen Ed Matthews and Thomas Tizzio had wrecked  AIG's stock value with schemes that illegally inflated its bottom line and lined their pockets.  

A new group of directors later opted to have AIG join in that consolidated action as a plaintiff, which is the company's right in a shareholder derivative action.  

The case is In re American International Group Consolidated Derivative Shareholder Litigation, No. 0769, Delaware Chancery court.  The shareholders are represented by Stuart Grant, Grant & Eisenhower, Wilmington, Del.   

(Reporting by Frank Reynolds, editor, Westlaw Journal Delaware Corporate)