U.S. Rep asks if AIG used bailout fund for PR attack

WASHINGTON (Reuters) - The head of a U.S. House of Representatives committee sent a letter on Tuesday to American International Group AIG.N demanding to know if it used bailout money to pay for public relations firms to attack critics.

Several congressional panels are probing the rise and fall of AIG, which has received about $180 billion (120.7 billion pounds) in government bailout money so far in an effort to stave off collapse. U.S. taxpayers now own about 80 percent of the company.

“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,” Rep. Ed Towns, a New York Democrat, wrote in a letter to AIG chief executive Edward Liddy, dated April 14.

Towns, chairman of the House Committee on Oversight and Government Reform, said he was surprised to discover the company was contacting reporters prior to a hearing in his panel to attack its witness, AIG CEO Hank Greenberg.

AIG spokesman Mark Herr said in a statement it was necessary to correct false and misleading statements being made by Greenberg.

“This issue is not about AIG’s corporate public relations expenditures, which are down sharply since last year. It is about correcting Mr. Greenberg’s false and damaging statements,” he said.

Greenberg, who was forced out by management related to other issues, has blamed current management for AIG’s woes, although he created the financial products unit where the problems began.

Towns asked Liddy for information, including dates, billing and any correspondence for any public relations firm hired on or after September 16, 2008, around the time of the first bailout.

Towns cited a report in the trade journal PR Week that AIG had retained Burston-Marstellar and also said he believed Hill & Knowlton had been hired.

Editing by Andre Grenon