NEW YORK (AFP) - US insurance giant Marsh and McLellan Co., facing a lawsuit for allegedly rigging bids, announced it is cutting about 3,000 jobs, five percent of the global staff.
"This is a difficult but necessary step, and we are committed to carrying out these reductions fairly," said the company's new president and chief executive, Michael Cherkasky.
The job cuts and other measures would result in restructuring charges of 325 million dollars but save 400 million dollars a year when fully implemented, he said.
"This has been a difficult time for the company. We are determined to address the issues at hand and committed to regaining the trust and confidence of our clients, employees and shareholders. We recognize the seriousness of the problems we are facing and are moving quickly to correct them," Cherkasky said in a statement.
On October 14, New York Attorney General Eliot Spitzer sued Marsh and McLennan, accusing it of steering clients to insurers with whom it had lucrative payoff agreements.
The former Marsh and McLellan chairman and chief executive, Jeffery Greenberg, resigned October 25.
A day after the resignation, Marsh announced an overhaul of its business practices, promising to accept no longer "contingent compensation" from insurers.
Spitzer's suit, filed in State Supreme Court in Manhattan, alleged that for years Marsh received special payments -- amounting to 800 million dollars in 2003 -- from insurance firms as rewards for business steered their way.
New York-based Marsh, at times, solicited fake bids, the lawsuit alleged, in order to deceive its clients into thinking that some competitive process had been followed.
Spitzer said the immediate victims were mainly large corporations seeking property and casualty coverage, small and mid-size businesses, municipal governments, school districts and some individuals.
11/09/2004 - 22:58 GMT - AFP