Washington - Federal regulators and auditors warned American International Group Inc (AIG) about a lack of transparency in monitoring its financial activities before the conglomerate nearly collapsed last month, a top Democratic lawmaker investigating the credit crisis said Tuesday.

Representative Henry Waxman, chairman of the Government Oversight Committee, scolded executives of the largest US insurer in his second day of hearings into the financial turmoil on Wall Street.

He questioned them about their massive salaries and the holding of an expensive executive retreat shortly after the government agreed to spend 85 billion dollars to help the firm stave off collapse.

"In each case, the companies and their executives grew rich by taking on excessive risk," Waxman said. "In each case, the companies collapsed when these risks turned bad.

"And in each case, their executives are walking away with millions of dollars while taxpayers are stuck with billions of dollars in costs."

Waxman presented a March 10 letter sent to AIG from a government regulator, the Office of Thrift Supervision, warning of the lack of auditing transparency.

"We are concerned that the corporate oversight of AIG financial products lacks critical elements of independence, transparency and granularity," Waxman said, reading from the letter.

Waxman also presented a copy outlining a meeting between AIG and its outside auditing firm. PricewaterhouseCooper auditors complained they were not getting enough access to AIG's risky financial ventures.

"PricewaterhouseCooper told the committee that the root cause of AIG's problems was that risk control groups did not have appropriate access to the financial products division," Waxman said.

William Sullivan, the CEO of AIG from March 2005 until June 2008, admitted the market could no longer sustain his firm's investments but rejected accusations that the company's risky exchanges amounted to gambling.

"I wouldn't refer to it as gambling. You know, these transactions were individually underwritten very carefully," he said.

Sullivan also said any bonuses he received were reviewed by a company committee. Waxman wanted to know why Sullivan received a 5- million-dollar bonus in 2007 when it was clear AIG was failing.