Executives Face Scrutiny Amid Financial Controversies

Strategic Insights -

John Houldsworth, an executive with Berkshire Hathaway Inc.'s Gen Re insurance unit, will plead guilty to a charge related to the exaggeration of American International Group Inc.'s finances. This marks the first guilty plea in the ongoing investigation into the alleged manipulation of AIG's financial statements. Houldsworth's cooperation in the probe is expected to aid the investigation. Meanwhile, Washington Mutual Inc. is acquiring Providian Financial Corp. in a bid to expand its presence in the credit card industry.

Key Takeaways:

  • John Houldsworth, 46, will plead guilty to conspiring to misstate AIG's financial statements and cooperate with the investigation.
  • Houldsworth was CEO of Cologne Re Dublin from May 1990 to June 2001 and is currently on paid leave at General Re.
  • The Securities and Exchange Commission has filed a civil complaint accusing Houldsworth and other senior Gen Re executives of aiding and abetting AIG's securities fraud.
  • Washington Mutual Inc. is acquiring Providian Financial Corp. in a deal worth an undisclosed amount, with a $245 million breakup fee included.
  • The acquisition will see Providian's 9.4 million account holders and $18 billion in loans become part of Washington Mutual's operations.
  • Washington Mutual's CEO is seeking to prevent rival bids by imposing the breakup fee.
  • Pfizer Inc. has won U.S. approval to sell Viagra, a male-impotence medicine, to treat pulmonary arterial hypertension.
  • The new application may add several hundred million dollars to Viagra sales, which were $1.68 billion last year.
  • Lowe's Cos., the world's second-largest home-improvement retailer, plans to open its first international stores in Canada in 2007, with up to 100 outlets.
  • The debut will include six to 10 stores in the Toronto area, employment 1,700 people.

Statistics:

  • AIG holds the title of the nation's biggest insurance company.
  • Houldsworth has been on paid leave at General Re.
  • The Securities and Exchange Commission has filed a civil complaint.
  • Providian ranks among the 10 largest issuers of credit cards in the industry.
  • Washington Mutual has $308 billion in assets.
  • Providian has $18 billion in loans.
  • Viagra sales were $1.68 billion last year.
  • Lowe's Cos. has opened over 1,100 stores in 48 states.

Sources:

  • "Gen Re exec to plead guilty, aid AIG probe" from news service reports.
  • "Washington Mutual buying Providian" from news service reports.
  • "Pfizer gets OK to sell Viagra for hypertension" from news service reports.
  • "Lowe's to open its first Canadian stores in '07" from news service reports.