Enron Deal May Save Fraction of Pensions
JENNIFER LUDDEN, host:
The Enron Corporation has been busy settling some of the many lawsuits filed against it as it tries to work its way out of bankruptcy. Yesterday, it agreed to pay up to $1 1/2 billion to settle claims of price gouging in California and other Western states during the energy crisis of 2000 and 2001. Also this week, former Enron employees, many of whom lost most of their retirement savings, won a $356 million settlement from the company. But the states and the former employees will only be able to collect a small fraction of the amounts claimed. What they really won this week was the right to join a long line of other creditors, all seeking money from a bankrupt company. NPR's Wade Goodwyn has this report.
WADE GOODWYN reporting:
Tom Padgett wasn't a wheeler-dealer at Enron. He wasn't an energy trader or a broadband executive. He didn't have anything to do with the accounting shenanigans or secret off-balance-sheet partnerships. Like most of the thousands of employees at Enron, Padgett was far down the chain of command, a lab technician six months away from retirement.
Mr. TOM PADGETT (Former Enron Employee): Well, when Enron collapsed, I lost everything I had in my retirement because I had it in the 401(k) program.
GOODWYN: Padgett had worked for a company called Tenneco, which was bought by Enron in the early '90s. Thirty years' worth of his retirement, $680,000, went down with the Enron ship. Padgett watched in disbelief as the value of the Enron stock in his 401(k) slowly began to nose-dive in the months before the company went bankrupt in December of 2001.
Mr. PADGETT: You're kind of like a deer caught in the headlights of a car. You don't know which way to run, so we trusted them and what they were saying.
GOODWYN: Padgett is talking about former Enron CEO Jeff Skilling and chairman Ken Lay. Lay repeatedly reassured his anxious employees that all was well, though it certainly wasn't. That's a big part of the bitterness Padgett still feels about what happened to his family.
Mr. PADGETT: I've got a lot of angry feelings still inside of me. My wife and I both go through periods of depression when we stop and realize that our whole world has been drastically changed by the greediness of a few individuals.
GOODWYN: Padgett may be able to recover about a seventh of what he had, which is important. For a while, many Enron employees thought they would get nothing. Glen Sarco(ph) represented the employees.
Mr. GLEN SARCO (Attorney): At this stage, I think that we're, you know, up to, you know, maybe he'll recover 15 cents on the dollar; the securities case is still going on. Some money will be recovered in those cases, but it's still too early to tell.
GOODWYN: A spokeswoman for Enron said the company was satisfied with the settlement agreement, but attorney Sarco says leaders of the business community, including the Chamber of Commerce and The Business Roundtable, are fighting back in federal court.
Mr. SARCO: Right now, in the courts around the country, there is a battle going on between the side who says, `Retirees have a right to bring their cases to court and, if they win, recover damages,' and many parts of the business community who say, `Those people are just out of luck.' But they actually, believe it or not, have taken the position in court that individuals who were harmed do not have a right to recover money.
GOODWYN: Those court battles are ongoing. For Tom Padgett and his former colleagues at Enron, other critical court dates are looming, specifically the criminal trials of Ken Lay and Jeff Skilling.
Mr. PADGETT: I'm looking very, very much forward to them going on trial and I would like to be there for every day of the trial, but I know that's not going to be possible. And I hope that whatever jury is selected find those guys guilty.
GOODWYN: The former top man at Enron will go to trial early next year.
Wade Goodwyn, NPR News.