Envoy worked for AIG

Richard Holbrooke

WASHINGTON - Obama administration special envoy Richard Holbrooke was on the American International Group Inc. board of directors in early 2008 when the insurance company locked in the bonuses now stoking national outrage.

Holbrooke, a veteran diplomat who now is the administration's point man on Pakistan and Afghanistan, served on the board between 2001 and mid-2008. During that period, AIG undertook the aggressive investment strategies that led to a near-collapse and forced a multibillion-dollar federal bailout.

President Barack Obama has insisted his administration was not responsible for AIG's financial woes, and a White House spokesman said Thursday that Holbrooke was unaware of AIG's decision to award retention bonuses to key employees.

Close to $165 million in bonus money was paid last weekend.

It remains unclear whether AIG's decision to grant the bonuses ever came before the board. An AIG spokesman did not respond to requests for comment.

Obama named Holbrooke as a special envoy on Jan. 22, two days after taking office. Spokesman Tommy Vietor said administration officials were aware of Holbrooke's work for AIG during background checks this year - when AIG already had benefited from federal intervention.

Holbrooke joined AIG's board in February 2001 and resigned in July 2008, two months before the company nearly collapsed. Over more than seven years as a board member, he might have earned as much as $800,000 in cash and company stock, according to AIG financial documents filed with the Securities and Exchange Commission.

Since September, AIG has received $180 billion in taxpayer money to keep it from failing and causing more damage to the U.S. economy.

Obama this week blasted AIG for what he described as the company's reckless course. He also defended his administration's handling of the company's rescue.

'Nobody here was responsible for supervising AIG and allowing themselves to put the economy at risk by some of the outrageous behavior that they were engaged in,' the president said.

For large companies such as AIG, boards of directors typically are made up of high-profile figures from business and academia.

Boards are expected to give the company's top leaders unvarnished advice. But with AIG on life support, the quality of the guidance the company received from its board is under fire.

For much of his tenure on the AIG board, Holbrooke had a role in approving salaries and compensation. From 2001 until mid-2005, he was a member of the board's compensation committee.