AIG’s accounting irregularities were orchestrated by its two top executives, former Chief Executive Maurice "Hank" Greenberg and former chief financial officer Howard Smith, internal review has shown, says the Wall Street Journal.

In a statement, AIG reported that ’’certain former members of senior management" were finding ways around internal controls, and the false accounting entries that inflated the company’s value by about $100 million since 2000 "appear to have been made at the direction of certain former members of senior management."

Greenberg’s lawyer David Boies commented on the findings in the following way: "Those decisions were made not merely by former senior management but by present senior management, including operational heads and the company’s present directors and auditors."

AIG on Sunday said that its restatement of financial reporting will lead to a reduction of $2.7 billion, or 3.3%, in the net worth of the company. The restatements will cover the period from 2000 to 2003 and the quarters ended March 31, June 30 and September 30 in 2004.

AIG for the second time delayed the filing of its 10-K report with the U.S. Securities and Exchange Commission which it planned, according to the promises in late March, to file no later than April 30. The new deadline is May 31.

AIG has said that the internal review has uncovered "material weaknesses" in its internal controls and it expects an adverse opinion from its auditor PricewaterhouseCoopers.

Martin J. Sullivan replace Maurice “Hank” Greenberg who resigned on March 14 amid regulatory scrutiny by New York State Attorney General Eliot Spitzer, looking at some of the reinsurance deals.

In continuation of a painful divorce of America’s largest insurer and its former chief Maurice Greenberg, the ex-executive is unable to recoup his personal belongings left in the AIG building. The company is now interested in whether these documents contain evidence as to AIG’s relations with the three private entities that jointly own a 16% stake in it: Starr International Co., C.V. Starr & Co., and Starr Foundation, a philanthropy.