The AIG non-scandal

Over at Hot Air, Ed links to an ABC affiliate's investigative report of an AIG training event recently held in Phoenix, Arizona. AIG, of course, was the recent beneficiary of taxpayer largess in the form of billions of dollars in bailout money. Without getting into the merits of whether the taxpayers should be bailing out companies in trouble or just letting them fail (I'm not convinced yet that we should bail them out), the scrutiny of this event is, well, pretty damned silly.

Says Ed:

If we’re footing the bill for this company’s management failures, then we should be seeing them cut costs to the bone. That means training gets done in the most efficient way possible, and not through costly junkets at resort hotels like Squaw Peak. Having lived in Phoenix, I know that is a high-end destination. If they have to travel at all, let them stay at Days Inn, or some other less expensive digs.

Fair enough, but that doesn't take into consideration the fact that these events are typically arranged and contracted for well in advance, sometimes more than a year. If AIG had canceled or moved the event, they'd be subject to heavy cancellation penalties payable to the resort. In the case of a cancellation, they'd have nothing to show for the expense...if they moved, they'd still have the expense of holding the event elsewhere on top of the cancellation penalty.

Another thing to consider is that these events are simply a necessary cost of doing business. It's nothing like the executive retreat a month or so ago that was heavily - and justifiably - criticized. This particular event was a training event for 150 independent financial planners whom AIG relies on to push AIG's financial services products. If these people don't know AIG's products, they'll sell somebody else's.

Now, let's take a closer look at the wretched corporate excess exposed by ABC-15.

The ABC15 Investigators went undercover at the resort and found AIG executives having poolside meetings while drinking coffee and working out at the spa while other attendees were in conference rooms for seminars.

We also watched as half a dozen of the executives went to dinner at McCormick & Schmick's at the Camelback Esplanade, racking up a bill of more than $400 for drinks, appetizers, and meals.

[ ... ]

In a press release provided to ABC15 following our attempt to speak directly with the executives, AIG claims product sponsors were underwriting $320,000 of the total meeting cost of $343,000.

Horrors! Meetings over coffee by the pool! Using exercise facilities! Dinner with drinks!

Gimme a fucking break. First of all, ABC15 has no evidence that these extras were going on anybody's expense report for reimbursement. They're letting their readers make that assumption. Second of all, even if the $400 dinner at McCormick & Schmick was being expensed, big deal. Four hundred bucks for a business dinner with six people is nothing. But I guess they could have gone to Outback Steakhouse instead. Oh, and by the way? Every hotel I've ever stayed at (and I spend about 100 nights a year in hotels) offers exercise facilities free of charge.

And $343,000 for a corporate event? Chump change, most of which is being reimbursed by AIG's event sponsors.

The only fair criticism here is the apparent subterfuge in downplaying it. AIG could have been a bit more open about it, and explained the necessity of holding it as a part of staying in business, rather than having an idiot like me defending them.

Whether one favors the bailout or not, we're de facto shareholders now in AIG. They need to hold events like these if we have any hope of seeing a return on our investment.