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Spitzer calls critics ‘apologists for the powerful’

September 15, 2005

By Ed Leefeldt

NEW YORK (Reuters) – New York Attorney General Eliot
Spitzer on Thursday refuted accusations he was “overaggressive”
and said critics were often “apologists for the powerful and
politically connected who commit crimes.”

Spitzer, who’s running for New York state governor as a
Democrat, has been the subject of negative editorials in The
Wall Street Journal, saying he is too zealous in attacking
investment banks, the mutual fund industry and insurance
companies for practices that have been common for years.

“These people are taking sides against integrity and for
distortion,” said Spitzer at a press conference announcing the
37 counts of fraud against eight former top officials of Marsh
Inc., the world’s largest insurance broker and a unit of Marsh
& McLennan Inc.

The attorney general said events had borne out the truth of
his accusations.

“No one disputes that investors were misled by analysts
(for investment banks),” he said, citing a memo showing that
one bank itself admitted that “accuracy in giving advice to the
investor conflicts with the paramount goal of our firm.”

“That goal is revenue,” said Spitzer. He also quoted a
study showing fees in the mutual fund industry had dropped $1.5
billion a year since he started his investigation into
practices such as after-hours trading.

Maurice “Hank” Greenberg, the former head of American
International Group Inc. ousted after a Spitzer investigation
of the insurance company for trying to make its books appear
better than they actually were and leading to a restatement,
said his errors were “foot faults,” a minor infraction in
tennis.

“No one can dispute that in the insurance industry there
was massive fraud,” Spitzer concluded. He noted that 17
industry executives in five companies had already pleaded
guilty to charges including fraud. If convicted of bid-rigging,
the Marsh executives, who include senior managers, could face
jail terms of up to 25 years, he said.

“There’s no argument for a bid that cheats the customer and
adds to the already high cost of insurance,” he said. “There
will be more criminal cases against carriers who were part of
this scheme.”




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