AIG Compliance, Anastasia Kelly and James Cole: Putting the Pieces Together

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Friday May 14, 2010 · 5:23 AM PDT

2010/05/14 · 05:23

As we try to develop a comprehensive picture of what exactly happened at AIG’s compliance group over the last couple of years (the very group tasked with ensuring that the company complied with laws and regulations), sources have provided additional pieces of the puzzle.

Christina Mallus, the legal HR manager during the crisis at AIG, whom we understand has since been promoted, was deeply involved in assisting senior compliance management (Anastasia Kelly, Suzanne Folsom, Kathleen Chagnon and Karen Nelson) in their successful efforts to make senior compliance officers disappear if they raised issues of mismanagement. Several compliance officers complained to management and wrote letters to the AIG board of directors before September 2008. These complaints and letters, which contained allegations of incompetence, lack of resources, discrimination, racism, cronyism and nepotism, were seen by Kelly, Folsom and the others as cause for retaliation and dismissal. Kelly, in fact, controlled all avenues of whistleblowing at AIG; even the Ethics Hotline reported back to her.

Bea Edwards

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Monday May 03, 2010 · 2:16 PM PDT

2010/05/03 · 14:16

We’re still trying to sort out what happened at AIG in the prelude to, and the aftermath of the federal bailout in 2008. Sources report to us that in the run up to the meltdown, Kathleen Chagnon, then-AIG Deputy General Counsel and Chief Compliance Officer, was in charge. Chagnon was reportedly a close friend of General Counsel Anastasia Kelly before arriving, and she was on good terms with the Independent Monitor, James Cole, after she settled in. Cole, of course, was in place at AIG to report to the SEC as part of a settlement of a lawsuit against the former AIG CEO for fraud. A major part of his job was to keep Kelly, Chagnon and later Folsom, honest.

Bea Edwards

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Thursday April 29, 2010 · 12:24 PM PDT

2010/04/29 · 12:24

Soon after she left her position as General Counsel at AIG in order to avoid the annual pay caps of $500,000 for federally bailed-out banks and companies, Anastasia Kelly sat down with Fortune Magazine and announced:

I wanted to put in a worldwide compliance and regulatory organization, but I kept hearing, ‘Why do we need this?’ I just kept pushing, and eventually we got that organization in place. When things blew up in 2008, it was very important in keeping things under control.

Given the amount of public financing the US government has sunk into AIG over the past two years, it would be reassuring to know that, at the very least, the corporate compliance department is in order there. That way, the feds can "wind down" their/our ownership and liquidate this load. Action appears to be increasingly urgent after the value of AIG common stock fell an alarming 16 percent Tuesday, and analysts predict that it will sink to less than 20 percent of its current value.

Bea Edwards

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Friday April 16, 2010 · 7:08 AM PDT

2010/04/16 · 07:08

On Monday, April 9, GAP sent a letter to Anne-Marie Leroy, Senior Vice President and General Counsel at the World Bank, concerning the corruption of the review of the Bank’s investigative practices by an external panel chaired by Paul Volcker in 2007. World Bank Administrative Tribunal (AT) rulings published five months ago expose the way in which Suzanne Folsom, former Director of the Department of Institutional Integrity (INT), the investigative unit, infiltrated the Volcker panel. The AT rulings show that Folsom intimidated witnesses and altered both practices and documents to mislead the panel. Then she cobbled herself and her buddy into the working group that implemented the panel’s recommendations.

Bea Edwards

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Monday April 12, 2010 · 1:07 PM PDT

2010/04/12 · 13:07

As the World Bank approaches its donor governments for great huge infusions of new cash and loan guarantees this year, many of which have expressed concern about fraud and theft at the global institution, senior management has produced an extravaganza of anti-corruption fanfare. On Friday, April 9th, in Luxembourg, high-level officials and eminent persons at the multilateral development banks (MDBs), including the World Bank, joined hands and skipped gaily downstage to the footlights where they unveiled their joint debarment agreement for applause and ovations. Under the new agreement, if a firm is debarred by one MDB, it’s debarred by all. Unfortunately, experience with the World Bank (as well as with the other banks) shows that high-viz, complex spectacles like this mean little because the political will to enforce them at the Bank itself is lacking.

Bea Edwards

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Thursday November 05, 2009 · 10:26 AM PST

2009/11/05 · 10:26

On October 20th, the High Level Commission convened to assess governance at the World Bank transmitted its report, "Repowering the World Bank for the 21st Century," to World Bank president Robert Zoellick. The report concluded (more or less verbatim) that:
• Current mechanisms for strategy formulation are not adequate for setting priorities and guiding operations;
• Mission creep is endemic, weakening accountability and increasing the risk that resources will be misallocated;
• The decision-making process is perceived as too exclusive;
• Insufficient institutional accountability for results weakens the World Bank’s effectiveness and legitimacy;
• The Bank’s resource base is insufficient.

Bea Edwards

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Tuesday October 20, 2009 · 8:06 AM PDT

2009/10/20 · 08:06

On Friday, October 16th, Raj Rajaratnam, a Sri Lanka national and hedge fund manager was arrested at his Manhattan home and charged with insider trading by the US Justice Department and the Securities and Exchange Commission (SEC). As the manager of Galleon Management LP, a Wall St. hedge fund, Rajaratnam is accused of running a network of IT and health care company insiders who helped him amass $20 million in profits in the past three years.

As it turns out, in addition to benefiting from private information while making trades for his fund’s hedgers, Rajaratnam also cashed in on public largesse through his corporations’ access to generous loans from the World Bank Group.

Bea Edwards

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Monday October 05, 2009 · 12:29 PM PDT

2009/10/05 · 12:29

At the Istanbul meetings of the World Bank and the International Monetary Fund (IMF) there is a certain amount of anguish. The US has gone rogue and demonstrated that there is a nominally liberal administration in the White House now. Over the weekend, Timothy Geithner announced that the World Bank needed better governance and more disclosure or the US was not going to contribute much. And US Congressman Barney Frank gave an interview from afar in which he excoriated the World Bank’s Doing Business Report as "a terribly reactionary influence" that is both anti-labor and anti-welfare (The report awards countries high ratings for ‘doing business’ if, legally, you can fire a worker for sneezing and you’re not encumbered by intrusive minimum wage laws).

Bea Edwards

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Sunday October 04, 2009 · 1:27 PM PDT

2009/10/04 · 13:27

The Annual Meetings of the Board of Governors of the World Bank and the International Monetary Fund (IMF), together with their associated festivities, are about to begin in Istanbul. The meetings are important for the world’s financiers because they’re debating how to re-divvy up the shares owned by each country in the IMF, which will lend hundreds of billions to selected Finance Ministers over the next few years. Third World Rich People (TWRP), who run 'poor countries,' are demanding that First World Rich People (FWRP), who run 'rich countries,' give them more shares. They want 7 percent of the IMF, 2 percent more than FWRP agreed to. Predictably, because the IMF is going to have a lot more (taxpayers’) money very soon, rich people are loading up to fight over it.

Bea Edwards

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Monday September 21, 2009 · 7:24 AM PDT

2009/09/21 · 07:24

Paul Wolfowitz, of DoD and World Bank fame, has a cover story in Foreign Policy in which he attempts to repair his shredded reputation as a strategic thinker. Our question: should we be accepting advice from arguably the most murderous and incompetent foreign policy czar since Henry Kissenger, from whom we are also still recovering?

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AIG Compliance, Anastasia Kelly and James Cole: Putting the Pieces Together

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Overseer Says AIG Can't Insure Regulatory Compliance

World Bank Ignores Corrupt Anti-Corruption Work

The World Bank’s Anti-Corruption Charade

Weak prescription for improved World Bank governance

The World Bank Group And Rajaratnam

Fighting Poverty at the World Bank Meetings

The IMF Festivities in Istanbul

Wolfowitz: Just Out of Reputational Rehab