Home » Conversations with the Editor » Spitzer’s Dilemma for 2006

Spitzer’s Dilemma for 2006

An Open Letter

Mr. Eliot Spitzer

New York State Attorney General

Albany, New York


Dear Mr. Spitzer:


It’s 2006 and you have a problem. Alas, there’s no easy way out.


As everyone knows, you’ve filed charges against Richard Grasso for accepting too much compensation from the New York Stock Exchange and against Maurice R. “Hank” Greenberg, the former chief executive of AIG, for allegedly manipulating the value of AIG shares. But you haven’t actually brought either case to trial.


Why not? It seems obvious that both of these are “hardened targets,” in thermonuclear speak, with tens of millions of dollars to defend themselves, if necessary.


And simply on the merits of the cases, it’s not clear that you can win either one. Grasso’s compensation package was approved by a board of directors (and it’s noteworthy that the only director you’re targeting, Ken Langone, is a Republican.) Moreover, the current leadership of the NYSE doesn’t want a public relations bloodbath. They’d like to move into the future, not be hobbled by the past.


Meanwhile, Greenberg’s camp has issued a white paper that pretty thoroughly refutes the charges you’ve made against him. It turns out that the practice of shifting insurance risks to offshore captive entities was, and remains, standard operating procedure in the world of reinsurance. The transaction with Warren Buffett’s General Re also was routine. AIG had “over-reserved” and needed a loss portfolio against its reserves, to maintain the industry’s traditional financial ratios. The payment of a percentage fee for that portfolio is also thoroughly routine.


In fact, what we are hearing is that you have no intention of bringing either case to trial because you know you can’t win. You just don’t have the right stuff. That would explain why you dredged up the allegations about how Greenberg allegedly went against the interests of AIG founder C.V. Starr when he died some 35 years ago. There is absolutely no chance that there can be any legal redress for something that never happened more than three decades ago.


In short, Mr. Spitzer, it appears that your goal is to keep these business leaders on the defensive in the pages of the newspapers, without having any real intent to go to court.


And that was pretty nasty stuff, calling up John Whitehead, a very distinguished gent who defended Greenberg in the pages of the Wall Street Journal, and declaring that you were “at war” with him.


Sir, all of this has shades of something that can only be called  “kangaroo justice.”


Now here’s where it gets even more interesting. Again as everyone knows, you’re running to become the governor of New York State this November. Even if you wanted to, you don’t have time to bring both the Grasso and Greenberg cases to trial and win them before, say, June, when the politicking gets hotter and heavier. By then, your ability to maintain the façade of being an attorney general sworn to uphold justice will be severely tested.


So how are you going to defend your track record as attorney general? You lost the case against the former Bank of America broker Theodore C. Sihpol III, who was acquitted by a jury on 29 counts. And then you dropped another case against Paul A. Flynn, a former trader for CIBC, who was also accused of illegal trading in mutual funds.


In short, you haven’t been successful, and that’s the message that is going to be communicated to voters. You are committed to a course of action in which you are going to run for the governorship having failed to demonstrate that your crusade was much more than politically motivated witch-hunting. Aside from a couple of early wins regarding Wall Street analysts and the like, you didn’t really serve the cause of justice.


We have argued in Chief Executive that you should resign to avoid the conflict of interest between your roles as attorney general and candidate. You didn’t take the advice. So how are you going to escape the trap that you’ve set for yourself?





William J. Holstein 

Editor In Chief

Chief Executive Magazine

To respond for possible posting, email Chief Executive’s Editor In Chief William J. Holstein at bholstein@chiefexecutive.net.  

Response To: Spitzer’s Dilemma for 2006

Very appropriate letter. “Hardened targets” on the defendant side, and the on the other side, “seemingly” bottomless pits of taxpayer money. Never ceases to amaze me how much we spend to return so little and not “for principle” but rather for “self promotion in the political arena”.  We, the people, “finance” individuals into elective office without ever seeing the true “total” cost


Bill Sample

Response To: Spitzer’s Dilemma for 2006

In view of what has happened to ethics in this country, especially over the past five years, it is both sad and quite disgusting for you/”Chief Executive” to attempt to ingratiate yourself with those who have been pushing everything to the limit and beyond – at the very least ethically, if not judicially.

The perception of Wall Street and Corporate America among the public and around the world today, is that both will do whatever they think they can get away with, no matter how repugnant and/or dishonest.  The only imperatives are perceived to be that the decisions  made benefit the decision makers personally and secondarily the corporate bottom line.  At least recent convictions – despite massive defense budgets – should have given you good reason to pause.

I do not wish to give any opinion about the Grasso/Greenberg cases, as I consider everybody innocent until proven guilty.  However, in this context it is quite a leap for you to ridicule a prosecutor, who has had the guts to take on difficult cases and thereby contributed to giving the impression that there are still some people on Wall Street and in Corporate America, who cares about honesty and integrity.  My only regret is that you/CHIEF EXECUTIVE do not share these view. Although I am hopeful that you will not nominate Ken Lay for Chief Executive for 2006.

Respectfully yours,

Soren C. Sorensen

Response To: Spitzer’s Dilemma for 2006

Your letter to Spitzer is a much needed public service.  And well done.  I only hope that it garners more attention and traction.

Nick Burkholder

Response To: Spitzer’s Dilemma for 2006

I see the CEO establishment has circled the wagons again.  What you fail to see is the wagons are burning, and as the winds change again to what is right, and not just who has the vast resources of money you imply makes CEO untouchable, the fallacy of blatant greed and political power must then fall.

I watch the CEOs chase the short term goals and grandiose riches at the expense of this country we call America. I trust you all have you copies of the PFNA on you desks.

Spitzer has his own agenda, as do so many of those who wish to see the people, not the raising amount of phoney CEOs who do nothing but lie, scheme and buy the law, reclaim America.

I know your group is determined to see this never happens. But in supreme arrogance they fail to see what is on the horizon.

It is sad.

E. Romanco

Response To: Spitzer’s Dilemma for 2006

Applaud!  Applaud!

Someone needed to call his hand.

Well written !


Chuck Howell, CEO,Great Lakes Airlines 

Response To: Spitzer’s Dilemma for 2006

Thank you most sincerely for taking a well-crafted swing at this unethical bully.

Steve Ramsden, President

Response To: Spitzer’s Dilemma for 2006

Your open letter to Eliot Spitzer may be the most petty and self-important attack I’ve read in a long time. It begs the question: what office are you running for? For only a political opponent would adopt such a petulant and self-righteous tone.

Your readers would have been better served by an opinion outlining why you believe that greater prudence should be exercised before accusations are made public. Or why an AG’s role should be to ensure due diligence before ensuring headlines. Or why standard operating procedures may, in fact, require more scrutiny and, possibly, legislative remedies before they’re painted as corporate sins.

The approach you took, however, was clearly meant to taint a candidate — to apply the same brush to his reputation that you claim he applied to others. Such a tactic, in turn, makes you suspect, reveals your partisanship, and makes you guilty of the very same grandstanding that you fault Spitzer for using.

As the magazine’s editor, you’re entitled to editorialize. Yet, by taking the stance you have, you imply that all CEOs are being unfairly scrutinized, that you’re their legitimate representative, and that CEOs are entitled to adhere to a different set of principles and scruples. Your timing, as a result, is either truly appropriate or truly misguided since, as a nation, we are now faced with questionably legal action by the country’s highest ranking CEO, the President of the United States.

As a reader, I would request that, if you have an opinion, keep it inside the magazine. If you want to address what you perceive to be unjust treatment by the forces of justice beyond the covers of Chief Executive, don’t duplicate the very actions you deplore.


Peter Altschuler, President, Words Worth & Company

Response To: Spitzer’s Dilemma for 2006

I would characterize Eliot Spitzer as the one who did what the SEC failed to do. His actions led to increased self imposed concerns by corporate boards, more bold actions by the SEC and increased regulations, some of which is not necessarily good for industry. A particular unintended consequence of SARBOX is the strangulation of smaller public corporations some of which took the chapter 11 route wiping our shareholders. All in all, I applaud Mr. Spitzer for his bold actions which were not unlike those of Rudy Guiliani who aggressively prosecuted corporate crimes in the 80’s. The comment in your excellent publication did deserve the balance of some credit for doing good, none of which was mentioned.

Gunther Karger, President, Discovery Group





About William J. Holstein

William J. Holstein
William J. Holstein is a journalist, consultant and speaker. He is the author of, "The Next American Economy: Blueprint For A Sustainable Recovery." For more of his work, visit www.williamjholstein.com.