The US government's chief overseer of bank bail-out funds has announced a probe into bonuses paid by troubled insurer AIG. The investigation will also look at what role the US Treasury played in approving the payments.
The announcement by Neil Barofsky, the special inspector-general of the Troubled Asset Relief Program (TARP), could turn up the political heat Treasury Secretary Timothy Geithner.
In testimony to the House Ways and Means sub-committee on oversight, Barofsky said he would 'act aggressively to recover the taxpayer's money' if wrongdoing were found in the insurer's bonuses.
'Preliminary information we have seen indicates that the TARP contract between AIG and Treasury that was entered into back in November specifically contemplated the payment of bonuses and retention payments to AIG employees, including AIG's senior partners,' he said.
Barofsky said his office would review Treasury's decision to authorise and approve such payments.
Republicans on the House of Representatives sub-committee pressed Barofsky on whether Geithner knew of the impending payouts worth $165m when he approved an extra $30 billion in bail-out money for AIG this month.
'The audit that I announced in my opening statement will have the answer to that question, whether he knew,' the inspector-general said.
