AIG Inc. has agreed to forfeit claims to more than $400 million in foreign tax credits and to pay a 10% penalty to settle a long-running tax shelter lawsuit related to seven cross-border transactions from the mid-1990s, the Manhattan U.S. Attorney’s Office announced on Friday.

Acting U.S. Attorney Audrey Strauss said in a statement that the U.S. had uncovered “overwhelming evidence” that the insurance company’s financial products unit had used the complex transactions to generate bogus credits on foreign taxes that it did not actually pay, in order to reduce the firm’s liability in the 1997 tax year.

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