continued After Drexel's demise, the detective firm, then called Kroll Associates, ran into financial trouble. According to press reports, it was bailed out by insurance giant American International Group, with which it still has a snug relationship. A Kroll spokesperson acknowledges that in 1993, American International had a minority position in Kroll and remains a client today.
Both American International and Kroll's parent, Marsh & McLennan (called Marsh Mac), are being investigated by Eliot Spitzer, New York's attorney general. Last October, Spitzer accused Marsh Mac of fraudulent self-dealing and bid-rigging. American International was one of the companies said to be involved in the bid-rigging that included a Bermuda insurance company. Early this year, Marsh Mac settled the charges with a payment of $850 million, but Spitzer is still investigating.
American International (the same firm that refused to fully fund any settlement San Diego may make with Roque de la Fuente) is under investigation by both Spitzer and the Securities and Exchange Commission. One subject is dubious accounting that may have inflated earnings by $3 billion in the last five years, according to the Wall Street Journal. Part of the probe revolves around another Bermuda-based insurance company in which the company has a 50 percent stake.
Offshore intertwinings are incestuous in the insurance industry. Spitzer told a U.S. Senate subcommittee last year that Bermuda insurance operations created "numerous opportunities for secrecy and insider dealings." Insurance companies do business in "offshore havens" to evade state regulation, Spitzer said. He pointed to four offshore companies that Marsh Mac had helped create.
There is a subplot that Forbes says is "worthy of a private-eye novel." After Marsh Mac bought Kroll, it ousted its chief executive and put Kroll's top exec, Michael Cherkasky, in the top job at the parent. Cherkasky was formerly Spitzer's boss in the Manhattan district attorney's office, is his tennis pal, and has contributed to his campaigns. "Did Marsh Mac buy Kroll thinking it was an insurance policy against an impending crackdown by New York attorney general Spitzer?" asks Forbes.
Will Kroll's sleuths look into that?