Labor Dept. Removes Enron Officials
WASHINGTON (AP) _ Control of Enron Corp.’s retirement plans is being transferred from company executives to an independent expert who will be appointed by the Labor Department in an arrangement announced Tuesday.
Enron must pay the cost of the independent, legal representative for three years up to a maximum $1.5 million a year plus expenses such as accounting services. The agreement may require bankruptcy court approval.
The legal representative, called a fiduciary, will ``aggressively protect workers interests during corporate bankruptcy proceedings and maximize the likelihood of recovering funds for the plans,″ Labor Secretary Elaine Chao said.
``Enron’s employees should be confident that their interests will be protected by a fiduciary who is unrelated to Enron,″ Chao said.
The fiduciary, which officials are in the process of securing, will assume control over operating the plans and investing their assets. The representative will also select and monitor investment managers and funds.
Enron’s agreement to pay for an independent fiduciary is unusual in such arrangements, labor officials said. Typically the cost is deducted from the retirement plans.
Many workers lost their retirement savings that were heavily invested in Enron stock as the price steadily declined last year. Overall, the 20,795 participants in Enron’s 401(k) plan had about 63 percent of their assets invested in company stock.
The department is investigating whether the company-appointed fiduciaries were prudent and acted only in the interest of the employees and the plan, as required under federal pension law.
Three company officials sat on Enron’s administrative committee in charge of retirement plans, including the executive vice president for human relations, Cindy Olson. She testified to Congress last week that she was warned in November of possible accounting irregularities that might destroy the company. But she said she did not tell other officials in charge of the retirement plans because the allegations weren’t documented.