NEW YORK (Reuters) - Troubled insurer American International Group Inc will freeze payments to a former CEO and officers of the unit that was the main source of its financial problems, New York Attorney General Andrew Cuomo said on Wednesday.

“This is to confirm that AIG has agreed to freeze any payments pursuant to the employment package of its former Chief Executive Officer Martin Sullivan in light of the attorney general’s ongoing review,” according to the letter from Andrew Cuomo to CEO Edward Liddy, which was reviewed by Reuters.

The agreement affects $19 million that was due to Sullivan, Cuomo told reporters on a media call. In July, AIG said Sullivan’s severance package totaled $47 million. Cuomo said it was possible the company could recoup some of the funds already paid out to Sullivan, a Briton who joined AIG in London as a teenager.

AIG has said it will try to claw back some executive payments, including to Sullivan, and cut spending by icing plans for several events, after an extravagant week-long California retreat it held came to light, drawing the ire of lawmakers.

The company will also freeze any distribution of funds from a $600 million deferred compensation and bonus pool for its AIG Financial Products subsidiary, which underwrote credit default swaps that triggered more than $25 billion in write-downs.

The former head of that unit, Joseph Cassano, had a share totaling about $69 million of those funds, according to the letter.

AIG nearly collapsed after troubles at the unit led to a severe cash crunch.

AIG spokesman Nicholas Ashooh said he was not able to comment on Cuomo’s letter. Sullivan and Cassano, who is based in London, could not be immediately reached for comment.

The insurer will also not pay roughly $10 million to former Chief Financial Officer Steven Bensinger, it was earlier reported.

3 CEOs IN 3 MONTHS

Cuomo said compensation to Sullivan, who was CEO from 2005 until June 15, was under scrutiny because his tenure coincided with the period when the losses occurred.

“If the company is required to take the bailout, it is ipso facto that management failed,” he said.

However, he added that even the new management at any company that accepts tax dollars -- including Liddy, who was named AIG CEO as part of the federal bailout last month -- should not receive “extraordinary” packages.

Robert Willumstad, who was AIG CEO from mid-June to September, turned down the severance package he was offered after about two months in the role.

AIG has been loaned in excess of $120 billion in recent weeks as it has sought emergency cash to keep it out of bankruptcy.

“Once a company accepts tax dollars there are different rules ... These are taxpayers who did not invest voluntarily,” said Cuomo.

Cuomo said a case pending against former AIG CEO Maurice “Hank” Greenberg, who stepped down from AIG in 2005 after 38 years at its helm, was an entirely separate matter.

Some of the thorny credit default swaps that caused such problems for AIG were entered into during Greenberg’s tenure. He quit the company amid an accounting scandal stemming from an investigation launched by Cuomo’s predecessor, Eliot Spitzer.

Greenberg told Reuters in an earlier interview that not enough was done by his successor to hedge the risk of losses from the credit default swaps, which were linked to toxic mortgage debt.

Cuomo on Wednesday said his office is also probing fat pay packages to executives at other companies, but declined to name names.

“It is not just compensation, but incentives -- perverse incentives for executives to produce (short-term) profit rather than long-term growth,” said Cuomo, of the practices that are now under the microscope.