AIG, days before a high-profile legal fight with a company controlled by former CEO Maurice Greenberg heads to court, promised to use any funds won at trial to repay U.S. taxpayers.

While any relief granted for AIG's equitable and legal claims will be subject to the findings and judgment of the court, AIG intends to use any monetary damages, including $4.3 billion of illicit stock sales, to repay the company's debt to the U.S. government, said AIG spokesman Mark Herr.

The case, scheduled to begin on Monday in U.S. District Court in Manhattan, relates to a long-contested block of American International Group stock held by Starr International Co, a company controlled by Greenberg.

A lawyer for Starr International was not immediately available for comment.

AIG, claiming breach of fiduciary duty, is seeking to wrest back shares held by Starr, and the proceeds of any sales, at the same time as it tries to repay about $85 billion in taxpayer loans.

The U.S. government stepped in to save AIG from collapse under bad mortgage bets last September, and has put up to $180 billion at the company's disposal since.

Starr's ownership of AIG stock has been in contention since 2005 when Greenberg left AIG. It held about 290 million shares at the time, then worth some $20 billion.

Some stock has been sold since, and the value of the remaining shares has fallen dramatically over the past year as AIG posted more than $100 billion in losses.

The trial is going ahead after an informal discussion between the parties about settlement last year failed, and after AIG more recently rejected having the matter decided by arbitration.

The case, at AIG's request, will be heard by a jury.

STAR WITNESS

Starr International had held a sizable stake in AIG since 1970 when Greenberg structured the firm as a vehicle to protect the insurer from hostile takeover.

Ted Wells, of law firm Paul, Weiss, Rifkind, is to argue on AIG's behalf that Starr International had a long-standing, irrevocable obligation to fund deferred compensation for AIG employees, something AIG says is even more important now given its precarious financial state.

David Boies, of Boies, Schiller & Flexner, is expected to argue on Starr International's behalf that Greenberg used the block of stock to fund deferred compensation for AIG employees on a voluntary basis, and never expressly committed to continue the program indefinitely.

Starr International ceased to be a compensation vehicle for AIG executives in 2005. It is now run by Greenberg as a private investment vehicle and for charity.

Greenberg, 84, is expected to be called by AIG to testify as early as next week.

Greenberg, who had been CEO for 38 years, left AIG in 2005 amid a broad investigation into the insurer's accounting practices, and use of offshore vehicles, led by then-New York Attorney General Eliot Spitzer. AIG settled the probes, which included the U.S. Securities and Exchange Commission and Department of Justice, for $1.6 billion in 2006.

Greenberg continues to fight the charges.

(Reporting by Lilla Zuill; Editing by Richard Chang)

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