The former chief executive officer and chief financial officer of AIG have agreed to pay penalties totalling $16.5m (£8.95m) between them, for an alleged accounting fraud that sparked a long running investigation into the running of the insurance giant. Hank Greenberg, CEO, and Howard Smith, the former chief financial officer, have agreed to pay $15m and $1.5m respectively. US regulator the Securities and Exchange Commission alleged that the pair were involved in 'numerous improper accounting transactions' that inflated AIG's financial statements between 2000 and 2005. In a statement, the SEC said: 'Greenberg publicly described AIG as the leader in the insurance and financial services industry with a history of delivering consistent double-digit growth. 'However, AIG faced numerous financial challenges under Greenberg's leadership that were disguised through improper accounting.' In 2006, AIG was charged with securities fraud and improper accounting, and the company settled the charges by paying disgorgement of $700m and a penalty of $100m. Smith has also been suspended from acting as an accountant for five years. Neither of the accused have admitted or denied the SEC's complaint, which was filed in the US District Court for the Southern District of New York. 'Corporate leaders cannot avoid the truth and consequences of their companies' performance by using improper accounting gimmicks and signing off on distorted financial reports,' said director of the SEC's division of enforcement Robert Khuzami.