washington (Bloomberg) — Three former American International Group Inc. chief executive officers deflected blame for the insurer's $85 billion US bailout, while a lawmaker said the firm blocked auditors from access to the unit that pushed it to the brink of collapse.

Maurice (Hank) Greenberg, who ran AIG for 38 years until 2005, told Congress yesterday that risk controls he put in place were weakened or eliminated after he left. Martin Sullivan, who was CEO for three years until June, and Robert Willumstad, an ex-Citigroup Inc. president who ran AIG until last month, blamed an accounting rule that forced the firm to book unrealised losses.

"When I left AIG, the company operated in 130 countries and employed approximately 92,000 people," Greenberg said in a written statement presented to the House Committee on Oversight and Government Reform in Washington. "Today, the company we built up over almost four decades has been virtually destroyed."

AIG, weakened by three quarterly losses of more than $18 billion tied to the housing slump, agreed on September 16 to a government takeover that gives the US a 79.9 percent stake. CEO Edward Liddy, appointed by federal officials to run the New York-based firm, has already tapped $61 billion of the credit line and must sell businesses to repay the loan.

The insurer's auditor PricewaterhouseCoopers LLP had raised questions about the company's transparency and complained about a lack of access to AIG's financial products unit, according to documents from a March 2008 audit meeting. The business sold credit-default swaps, the contracts that plummeted in value as the securities they guaranteed declined, causing more than $25 billion in AIG write-downs.

That same month, AIG's top federal regulator warned the company in a letter than the company's oversight of subsidiaries "lacks critical elements of independence, transparency and granularity" and contained "a material weakness."

Joseph St. Denis, a former AIG auditor, resigned in protest after financial products head Joseph Cassano denied his input on how the firm valued its liabilities, said Committee Chairman Henry Waxman. "I was concerned that you would pollute the process," Cassano told St. Denis, according to Waxman.

Cassano, who stepped down in March, is still being paid $1 million a month by AIG for consulting, said Waxman, citing a document provided by AIG to the committee staff.

Lawmakers lashed out at AIG for "wining and dining" its executives in a week-long conference at the St. Regis Resort in Monarch Beach, California, just days after the bailout. The stay cost $440,000, Waxman said.

"Have you heard of anything more outrageous?" said Representative Elijah Cummings, a Maryland Democrat, noting that the bill included $23,000 for spa services. "They were getting their manicures, their facials, pedicures, massages while the American people were footing the bill."

The trip was scheduled a year earlier to reward top salespeople for the company's life insurance business, said AIG spokesman Nicholas Ashooh.

"It's as basic as salary as a means to reward performance," Ashooh said in a telephone interview. "It was not top AIG executives running away to California."

All three former CEOs submitted written testimony that was released by the committee. Greenberg is ill and won't testify in person, said his lawyer Lee Wolosky.

Sullivan, 54, and Willumstad both said so-called "mark-to- market" accounting forced AIG to book unrealised losses on distressed mortgage-backed securities and credit-default swaps.

AIG employs 205 people in Bermuda, but managment has assured staff that there will be "minimal impact" from AIG's sell-off on the Island.