The Marketplace Report: Returning Enron Bonuses
ALEX CHADWICK, host:
Back now with DAY TO DAY. I'm Alex Chadwick.
A federal bankruptcy judge has ordered 40 former energy traders for Enron to give back $20 million that they'd gotten in bonuses. They got them just before Enron declared bankruptcy four years ago. "Marketplace's" Tess Vigeland is here from Los Angeles.
Tess, what are the details there?
TESS VIGELAND reporting:
Well, basically, the judge is telling the traders to return the money, and then that money is going to go to former Enron employees who were fired around the same time as the bonuses went out, and that was just a couple of days before the company filed for Chapter 11. As you said, this was four years ago now. The traders didn't necessarily do anything wrong by accepting the money, but the judge says that the money shouldn't have gone out, and now it'll be dispersed to about 4,500 other employees.
CHADWICK: Still, isn't it unusual for a judge to order traders to give back money?
VIGELAND: It certainly is. It's very unusual. And it's unusual even to see executives have to give back money that they've made on ill-gotten gains. We have seen some of that with some of the more high-profile corporate scandals over the last couple of years. For example, the former CFO of Enron, Andrew Fastow, had to liquidate a lot of what he owned, including houses, as restitution. But Duke University Law Professor Jim Cox says what's even more unusual here is who is getting the restitution.
Professor JIM COX (Duke University Law School): Not only do we see the clawback from traders, but also where the money's going. It's not going in the hands as you--pockets of investors. It's going into the workers who have, as we know, lost their jobs, lost their pension funds that were invested. That's very unusual. I can't recall that ever happening before.
VIGELAND: And he says that this action says a lot about the bankruptcy judge who's overseeing the case, that he's sensitive to the fact that employees really took it in the chin when Enron imploded.
CHADWICK: Well, what is next in the Enron saga, Tess?
VIGELAND: Actually, Alex, next month is a pretty big one. It's been four years, as we said, since the company went belly up, and the top executives are finally headed for trial. The company's founder, Ken Lay, the CFO, Jeff Skilling, and Enron's main accountant, Richard Causey, are all scheduled to be in court starting on January 17th. Lay, of course, is accused of conspiracy and fraud; Skilling and Causey both up for insider trading, as well. Basically, that they were the main architects of all those off-the-books partnerships that made the company look healthier than it was.
And today on "Marketplace," we're looking into details of a settlement by satellite provider DirecTV over making sales calls to folks who were on the Do Not Call list.
CHADWICK: All right. Thank you, Tess.
Tess Vigeland of public radio's daily business show "Marketplace," with us regularly at this time for discussions about money and business, and produced by American Public Media.