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Public-policy funding raises questions

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By Rick Cohen

The relationship of Maurice “Hank” Greenberg, former CEO of the American International Group (AIG), with the Starr Foundation represents a troubling development in which an individual with for-profit interests appears to be bankrolling a campaign against government regulations with philanthropic dollars.

The Starr Foundation is a reputable foundation more than a half-century old with significant grantmaking in higher education, public health and international relations.

But in recent years, Starr also captured the attention of then-New York Attorney General Eliot Spitzer regarding Greenberg’s role as the foundation’s board chair.

According to Spitzer, who since has been elected governor of New York, Greenberg and his business partners sold some of the stock in AIG founder C.V. Starr’s estate, which they served as executors, to firms they controlled at artificially low prices.

Because the assets were to have benefited the foundation, Spitzer alleged, Greenberg and his associates had enriched themselves to the detriment of the estate and the foundation, a “fundamental conflict of interest” shortchanging the foundation by some $6 billion.

Greenberg was incensed: Noting that the foundation’s assets grew from $1 million in 1968 to $3.5 billion in 2005, and that it gave out $2 billion in grants, he launched a crusade to defend his reputation and attack government oversight in the era of the Sarbanes-Oxley law on financial and accounting disclosure.

The Starr Foundation now has shown up recently as a potential player in Greenberg’s crusade.

The National Chamber Foundation, or NCF, is a 501(c)3 arm of the U.S. Chamber of Commerce with the purpose of research and public policy analysis on issues of tort reform and other issues of concern to the corporate sector.

Between 2002 and 2006, NCF received 17 foundation grants, according to Foundation Center online.

Of those grants, seven were from corporate funders, totaling $2.2 million, and 10 were from the Starr Foundation, totaling a whopping $24.25 million.

Perhaps Starr simply supported the Chamber’s longstanding concerns about Sarbanes-Oxley and about tort reform — Greenberg once referred to tort lawyers as “terrorists” — but the Chamber’s leader, Thomas J. Donohue, has consistently spoken out in support of AIG and of Greenberg personally in their run-ins with regulators.

In December 2006, something called the Committee on Capital Markets Regulation issued a report on Sarbanes-Oxley that concluded “U.S. markets were suffering under overzealous enforcement and unwieldy rules.”

The lion’s share of the panel’s funding, some $500,000, came from a grant from the Starr Foundation.

Starr’s lead funding role led many critics to ascribe the report, regardless of its merits, as yet one more element in Greenberg’s war against his federal and state regulatory critics, made even more dubious because of the use of tax-exempt foundation resources.

Businesses like AIG, billionaire corporate honchos like Greenberg and business associations like the U.S. Chamber of Commerce have every right to promote political positions in which they believe.

But in this case, the array of actors, organizations and foundation grants might lead many observers to believe the Starr Foundation’s grantmaking to the National Chamber Foundation and the Committee on Capital Markets Regulation tips the scales a bit too much in the direction of Hank Greenberg’s personal and pecuniary interests rather than a broader, disinterested public-policy position.


Rick Cohen is national correspondent for the Nonprofit Quarterly.

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