Congress Probing AIG Spin Shop

Congress is demanding information from AIG about reports that the bailed-out insurance giant has four PR firms on its payroll — and about its recent PR blitz aimed at discrediting former CEO Hank Greenberg.

In a letter sent this morning to AIG chief Ed Liddy and obtained exclusively by TPMmuckraker, House Oversight committee chair Ed Towns requests detailed information on AIG’s PR expenses, specifically mentioning Hill & Knowlton, and Mark Penn’s Burson-Marsteller, two high-priced experts in Washington spin that have signed on to represent the firm.For both the PR firms, Towns wants to know: when and why they were hired; which staffers at the firms have worked with AIG; and which subcontractors they’ve hired, and for what. Towns also wants copies of all documents exchanged between AIG and both of the two firms, including bills and payments.

Burson-Marsteller and Hill & Knowlton are both among the heaviest of hitters in shaping Beltway opinion. Just yesterday, Burson announced (sub req.) that Dana Perino, President Bush’s last White House press secretary, had signed on as “chief issues counselor.” In addition to CEO Penn, who masterminded Hillary Clinton’s presidential campaign, Burson’s roster also boasts former Clinton administration communications director Don Baer, former Clinton speechwriter Josh Gottheimer, and top Bush adviser Karen Hughes. As for Hill & Knowlton, it has represented Wal-Mart, the CIA, and a string of other big-name clients. Stacie Paxton, the DNC’s national press secretary during the 2008 campaign, recently joined the firm as a vice president.

In the letter, Towns also demands more information on AIG’s coordinated attacks on Greenberg just before the former CEO’s congressional testimony earlier this month — which we wondered about the time. Greenberg has been publicly sparring with AIG, which he left in 2005, over who’s to blame for the company’s collapse last fall.

Towns writes:

On the eve of the hearing, the Committee was surprised to hear allegations that AIG was contacting the news media and others to attack Mr. Greenberg’s credibility, and circulating an anonymous paper entitled “The Greenberg Legacy”. I would be extremely disappointed to learn that any of the billions of taxpayer dollars invested to support AIG may have been diverted to finance a public relations campaign against critics of the AIG bailout.

Later in the letter Towns asks:

Was the paper, “The Greenberg Legacy”, authored and circulated by, or at the behest of, AIG? If so, please identify all outside contractors who had a role in the creation, review, or distribution of that paper.

There’s little doubt that “The Greenberg Legacy” — which notes the various ongoing investigations into Greenberg, then declares “we don’t understand how he can be viewed as having any credibility on any AIG issue” — was produced and put out by AIG. Pro Publica reported that fact right after it was released, and a Word Document version of the paper obtained by TPMmuckraker lists AIG as the creator, and “herr” — almost certainly AIG spokesman Mark Herr — as the author.

Towns wants the information — which AIG is legally required to give him — by April 28.

Since September, AIG has received $182 billion in federal bailout funds, and is over 79-percent owned by US taxpayers.

Late update: We missed this story by Time from late last week on AIG’s PR operation.

It adds a bit of detail on what Burson and H&K are doing for AIG: According to AIG spokesman Nick Ashooh, writes Time, “Burson-Marsteller handles controversial issues and Hill & Knowlton fields inquiries from Capitol Hill and prepares congressional testimony for company officials.”

And it includes a response from Ashooh to the charge that the bailed-out company is spending too much on spin: “If the criticism was we were running image-advertising or doing sponsorships to make ourselves look better, I could see that. But we’re doing a lot of information-processing. It’s really been just responding to inquiries [from Congress and the media.]”

We’ve put in our own request to AIG for a response to today’s letter from Towns, but haven’t yet heard back. Which is strange, since it looks like their public relations operation isn’t lacking for resources.

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