Philly Deals: Canada’s consulate says so long, au revoir

It's been a long time since Philadelphia, national capital of the young republic, was home to a polyglot ambassadorial corps, led by French and Spanish aristocrats who financed the Revolution, bankrolled world trade, hosted cool parties, and filled the best pews at Old St. Mary's.

A handful of nations — Mexico, Italy, Israel — still maintain full-service consulates here, aiding exporters and immigrants and stray travelers; more than a dozen European, Latin American, and African countries name part-time honorary consuls.

But the local diplomatic corps will be diminished, at a yet-unspecified date later this year, when Canada shuts its full-time consulate and other offices as a cost-cutting move.

Work now done at the consulate will shift to Canada's embassy in Washington, spokesman Hani Nasser told me. Canada also will shut its Princeton satellite office and its Buffalo, Raleigh, Phoenix and Anchorage consulates, leaving 17 U.S. missions to provide better "value for money" for Canadian taxpayers.

"We take for granted our relationship with Canada, while in fact they are the strongest and most important foreign business relationship many companies have in this region," protested Scot DeCristofaro, president of Philadelphia Sales Co., a trade consultant to exporters.

"It's always a concern when a foreign government closes an office that was tasked with supporting foreign trade," he told me, citing the importance of Canadian military orders to locally made capital goods like Boeing helicopters and Lockheed Martin electronics, as well as the busy truck, train and air traffic between the Delaware River ports and the northern border, and the importance of keeping friendly at high levels "to sustain business."

American International Group has agreed to pay $100 million in penalties, $46.5 million in delayed taxes, and hundreds of millions in payments to insurance-industry funds for misreporting more than $2 billion of workers' compensation accounts as if they were general liability insurance — a practice that enabled the largest U.S.-based insurer to escape its responsibilities for financing a workers' comp system under extra financial stress.

Pennsylvania, one of AIG's lead regulators, will collect $8.6 million in fines, $3.6 million for its workers' comp fund, and $4.6 million in taxes and assessments, the biggest fine in the agency's history, Insurance Commissioner Michael Consedine said in a statement last week.

But why did it take so long? AIG is being busted for misconduct that dates back "primarily between 1985 and the early 1990s," state Insurance Department spokeswoman Rosanne Placey said.

Internal memos identifying the company's "illegal" and "criminal" deceit in its claims reporting were brought to the personal attention of boss Maurice R. "Hank" Greenberg back in 1992, according to the texts of internal memos made public by the New York state insurance department after a whistleblower complaint in the year following Greenberg's 2005 departure.

There's a closing-the-door-after-the-horses-escape quality to this action, and it's an indictment, not just of Greenberg's high-handed management, but also of the inadequacy of the state regulatory apparatuses that failed to stop him in the decades leading up to the company's 2008 failure and federal bailout.

Placey sees it differently. "This settlement shows coordinated state insurance regulation at its best," she told me. "We took on one of the biggest and most sophisticated companies in the world that was engaging in complex accounting misreporting and came down on them hard in the end."

So what will happen to Greenberg, who is still suing the government for taking over the company he built, and to his henchmen, who ignored their own compliance people and kept the scheme quiet?

"Those involved are no longer with the company," Placey noted. Current managers "cooperated" and agreed to extra penalties if they get caught pulling this stuff again. Plus, "all the relevant information has been shared with law enforcement," in case prosecutors decide there's a civil or criminal case to be made for breaking the law all those years.