Suzanne Folsom, former World Bank Golden Parachuter who has now departed AIG with a second parachute worth $1 million in severance, has been replaced by Karen Nelson. Nelson was Folsom’s hatchet-man at AIG from 2008-2009 and is now the interim acting Chief Compliance Officer reporting to the CEO. Under Folsom, Karen Nelson was the deputy who helped bury the bodies when a majority of senior compliance personnel were terminated in October 2008 at the AIG corporate compliance oversight group.
New sources tell GAP that the massacre befell the compliance people barely one month after theSeptember 2008 financial services collapse, in retaliation for their complaints to superiors about lax regulation in the reckless run-up to the AIG meltdown.
Oddly, corporate compliance was one of the first groups to suffer layoffs after the financial collapse. Nelson ably assisted Folsom in the terminations, with the benediction of Anastasia Kelly, AIG General Counsel. Multiple sources say that both Folsom and Nelson ran roughshod over the compliance group, creating the climate of mismanagement and cronyism that prevailed. Nelson ascended when Folsom herself was pushed out of the organization by the CEO for telling tales out of school about him and his compliance qualifications. Of course, no one felt too bad for Folsom, with her friend Kelly arranging a generous severance for her (Kelly herself left simultaneously with a multi-million dollar severance package). Sources have also revealed that nine positions have finally been advertised to replace the senior compliance lawyers and officers fired over 18 months ago.
There is a lot of explaining to do by Kelly, Folsom, and now Nelson for fiddling while AIG burned. The Independent Consultant, James Cole, stationed at AIG to ensure that the compliance group actually functioned should also be answering a few questions. Its time to install a seasoned compliance oversight executive at AIG who has the strong ethical standards and intellect necessary to put in place an appropriate, properly resourced program at what remains of the company.