Ex-Enron Workers Win $67M in Pension Suits
By MARCY GORDON
The Associated Press
Wednesday, May 12,
2004; 8:03 PM
WASHINGTON - Former Enron employees who lost millions of dollars in
retirement money in the company's stunning collapse would get at least $66.5
million from two newly reached settlements of lawsuits, Labor Secretary Elaine
Chao said Wednesday. The employees had alleged in a class-action suit that they lost more than $1
billion because the now-bankrupt energy company and its officers failed to
execute their duties in administering Enron's pension plan. The partial
settlement calls for the company employees who were trustees of the plan to hand
over an $85 million insurance policy that covered them against liability. It
resolves the claims against Enron's human resources staff and company directors,
but not those against the company itself and Kenneth Lay, who had been Enron's
chairman, and former chief executive Jeffrey Skilling. Attorneys for the Enron employees said their deal would be the largest
settlement ever of a case involving company stock in retirement plans. "This is an excellent result," said Clyde Platt, an attorney with Hagens
Berman in Seattle. Separately, former company directors have agreed to pay a total $1.5 million
to resolve a civil suit by the Labor Department. The department's suit, filed last June, also named Lay and Skilling. The
government sought to recover hundreds of millions of dollars in lost employees'
retirement money, alleging that Enron and its top executives mismanaged
retirement plans full of overpriced company stock. The Labor Department set as a condition for its participation in the deal
that a minimum of $66.5 million be returned to the depleted Enron 401(k) and
employee stock ownership plans. Some of the remainder of the $86.2 million total
of both settlements would go to pay the private attorneys' fees, subject to
court approval. Also, up to $300,000 of the directors' $1.5 million settlement with the Labor
Department would be paid as a penalty. In addition, the directors - including Wendy Gramm, former head of the
Commodity Futures Trading Commission and wife of ex-Sen. Phil Gramm, R-Texas -
would be barred for five years from acting as trustees of any federally
regulated pension plans without the Labor Department's permission. The directors
did not admit wrongdoing under the settlement. Both suits were filed in federal court in Houston, where Enron had its
headquarters, and the settlements must be approved by the court. "If approved by the court, these settlements guarantee a significant recovery
for the Enron workers, retirees and their families," Chao said in a statement
issued late Wednesday. "We will continue to pursue additional recoveries and all
available remedies to hold Enron and its executives accountable. Corporate
malfeasance will not be tolerated." More than 20,700 participants in Enron's 401(k) plan had nearly two-thirds of
their assets invested in company stock. The company spiraled toward bankruptcy in late 2001 and the stock collapsed,
from a high of nearly $85 in December 2000 to less than $1 in November 2001.
Employees were not told about the deteriorating finances and were blocked for a
time from selling the declining Enron stock in their retirement accounts. The Labor Department declined to discuss the pending claims against Lay and
Skilling, other than to say the case continues. Lawyers for the former Enron
employees also indicated their lawsuit will proceed. Skilling attorney Daniel Petrocelli declined comment Wednesday. An attorney
for Lay didn't immediately return a telephone call seeking comment. Federal prosecutors in February charged Skilling with nearly three dozen
counts of fraud and other crimes stemming from Enron's collapse. He has pleaded
innocent and is free on bond. Lay, who has disputed the government's allegations, is not facing any
criminal charges. --- On the Net: Labor Department:http://www.dol.gov