Friday, February 27, 2009

Bank of America’s Lewis Testifies, Gets Subpoena Over Bonuses

Feb. 27 (Bloomberg) -- Kenneth Lewis, chief executive officer of Bank of America Corp., testified for four hours at New York Attorney General Andrew Cuomo’s offices in a probe of $3.6 billion in bonuses paid at Merrill Lynch & Co. just before it merged with the bank.

“I answered the questions that were asked to the best of my knowledge,” Lewis, 61, said yesterday after the deposition, before being driven away from the attorney general’s office in lower Manhattan in a black Lincoln Navigator. “I hope this brought some clarity.”

Benjamin Lawsky, a special assistant to Cuomo, said after Lewis left that the attorney general’s office served the bank during the deposition with a subpoena to produce a list of the individual bonuses.

“The attorney general is severely disappointed in Bank of America’s decision in not turning over specific information: who got what bonus at Merrill Lynch,” Lawsky said. “The list goes to what individuals got and when they got it.”

Cuomo has been examining whether Merrill broke securities laws when it paid the bonuses. He is cooperating with U.S. Special Inspector General Neil Barofsky in a federal probe of executive pay at banks that received money from the U.S. Treasury’s Troubled Assets Relief Program. Merrill and Charlotte, North Carolina-based Bank of America have received about $45 billion in TARP money. The bank completed its acquisition of Merrill on Jan. 1.

Bank’s Offer

Bank of America has been offering the names of individual bonus recipients to Cuomo for two weeks on the condition that he keep them confidential, said Robert Stickler, a bank spokesman in phone interview yesterday.

“He refused to do that,” Stickler said. “We believe our employees are entitled to privacy in terms of their compensation. We also believe that to make the compensation of individuals public would put us at a competitive disadvantage with people who want to recruit our employees.”

Stickler had no comment on the subpoena.

Asked whether Cuomo’s office got the list of individual bonus recipients from former Merrill Chief Executive Officer John Thain, who testified for Cuomo for the second time this week, Lawsky declined comment.

Thain’s Testimony

Thain, when deposed by Cuomo’s office on Feb. 19, said he couldn’t identify those who got bonuses, citing orders from Bank of America that he keep the information confidential. Cuomo went to court Feb. 23 to compel Thain to disclose the recipients. A judge ruled he was free to disclose the names.

Thain testified again on Feb. 24 for 2 1/2 hours, said his attorney, Andrew Levander.

“He cooperated thoroughly and answered whatever was asked,” Levander said of Thain’s Feb. 24 testimony in an e-mail. Levander declined to comment on whether Thain was asked to identify bonus recipients.

New York State Supreme Court Justice Bernard Fried will decide if Thain’s testimony will become public, according to Levander.

Lawsky said Lewis’s testimony yesterday lasted about four hours and covered “many topics.”

In a Bloomberg Television interview on Feb. 25, Lewis declined to comment on whether he or the bank directed Thain not to disclose the recipients.

Lewis also said the acquisitions of Merrill and Countrywide Financial Corp. have been “stars” so far this year.

Merrill will be “a thing of beauty” over the long term, Lewis said. Merrill, the New York-based securities firm, lost $15.8 billion in the fourth quarter.

Lewis flew on a corporate jet for the deposition by Cuomo’s office “because of the importance of this meeting,” Timothy Gilles, a Bank of America spokesman, said in an interview.


No comments: