By WILLIAM McCALL
Of The Associated Press
Insurance giant AIG will pay $8 million to settle a lawsuit over Oregon Public Employees Retirement Fund losses blamed on bid-rigging and failure to disclose unethical or improper practices, state officials announced Thursday.
Oregon Attorney General John Kroger and state Treasurer Ben Westlund said AIG caused the state pension fund to lose about $15 million because the value of the company's shares was inflated between 2000 and 2005.
The pension fund had a value of $51.5 billion as of Jan. 31.
American International Group Inc. was a major player in credit default swaps, cited as a catalyst for the market collapse leading to the recession in 2008 and 2009.
In a joint release issued Thursday, Kroger and Westlund said AIG used more swaps than the company could pay for and failed to properly account for that debt in regulatory filings.
AIG admitted no wrongdoing or liability as part of the Oregon settlement.
The agreement reserved the right for Oregon to participate in a federal class-action lawsuit against AIG.
The state lawsuit claimed that AIG repeatedly failed to disclose unethical and improper practices, including a bid-rigging scheme with other insurers.
The complaint said the value of AIG stock declined repeatedly after the corporate behavior was made public and after the company corrected what were then misleading corporate disclosure documents.
Oregon's public employee retirement system, or PERS, has about 320,000 working and retired members, including police officers, firefighters and teachers who rely on the pension fund.
AIG must pay the $8 million by Monday, according to the agreement.