TRIAL STARTS FOR FORMER MARSH EXECS
Two former executives of giant insurance broker Marsh & McLennan Cos. Inc. went on trial earlier this month for what prosecutors said were their roles in a lucrative bid rigging scheme.
William Gilman, who was executive marketing director, and Edward J. McNenney, ex-global placement director, are charged in Manhattan’s state Supreme Court with scheme to defraud, first- and second-degree grand larceny and restraint of trade.
The two have pleaded not guilty. If Justice James Yates convicts them, they each would face up to 25 years in prison.
Their lawyers say the state attorney general did not like the way the defendants worked but they did nothing criminal.
The prosecution says the defendants conspired with brokers and companies to arrange noncompetitive bids for Marsh’s customers from late 1998 to September 2004. Customers included Vivendi, Cisco Systems, IBM, and State Farm.
“This case is about greedy and arrogant people,” said Assistant Attorney General Nina Sas. “Instead of letting market forces work, they became the market forces” by controlling how much was bid to get business and by whom it was bid.
Sas said that the former executives set a target premium for the predetermined winner to bid after getting deliberately losing bids from other insurers.
The defendants’ lawyers acknowledged that their clients’ approach was not pure “unguided competition” but said it worked best for all. They said some carriers are not suited to insuring specific businesses and that the scheme helped avoid gaps in coverage, and lent more stability in premium costs.
In January 2005, Marsh agreed to pay $850 million to end then-Attorney General Eliot Spitzer’s investigation.
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