News Release
EBSA News Release: [05/12/2004]
Contact Name: Lisa
Kruska
Phone Number: (202) 693-4676
WASHINGTON—U.S. Secretary of Labor Elaine L. Chao today announced the filing of settlements to restore at least $66.5 million to the Enron 401(k) and employee stock ownership plans. The proposed settlements, which must be approved by the court, cover agreements in both the Department’s litigation and the private class action lawsuit brought on behalf of the plans’ participants. Neither settlement applies to Enron Corporation and its former executives and inside directors, Kenneth L. Lay and Jeffrey K. Skilling.
“If approved by the court, these settlements guarantee a significant recovery for the Enron workers, retirees and their families. We will continue to pursue additional recoveries and all available remedies to hold Enron and its executives accountable,” Secretary Elaine L. Chao said. “Corporate malfeasance will not be tolerated.”
The Labor Department’s agreement covers the former outside directors of Enron’s Board. The private settlement also covers the plans’ administrative committee and others. In addition to monetary recoveries, the outside directors are barred from knowingly assuming fiduciary responsibility with respect to ERISA-covered plans for five years unless agreed to by the department. Absent settlement, the department will continue its litigation against the plans’ administrative committee and will seek additional monetary recoveries and injunctive relief.
The department sued Enron, corporate directors and the administrative committee on June 26, 2003, for violating the Employee Retirement Income Security Act (ERISA). The suit alleges that Lay, Skilling, the former outside directors and the former members of the administrative committee failed to consider the prudence of Enron stock as an appropriate investment for the retirement plans and did nothing to protect the workers and retirees from extensive losses. The board of directors also failed to properly appoint and monitor a trustee to oversee the employee stock ownership plan (ESOP). Lay was separately charged with misrepresenting Enron’s financial condition to employees and plan officials and encouraging them to buy the stock.
The settlement resulted from a comprehensive investigation conducted by the Dallas regional office of the department’s Employee Benefits Security Administration and the Office of the Solicitor.
Chao v.Enron
Civil Action No. H-03-2257/Consolidated with H-01-3913