If Enron does not dismiss its current pension administrative committee, the Labor Department will “seek a court order replacing these people with a qualified independent fiduciary,” Ann Combs, the department’s assistant secretary, said in a statement Sunday.
“Our objective is to replace [Enron’s pension committee] with an independent fiduciary, expert in [pension law] and experienced in protecting the interests of participants and beneficiaries in complex pension plans like Enron’s,” Combs said.
Combs said corporate pension administrators should “serve as plan fiduciaries, with responsibility for operating the plans and protecting the rights of participants and beneficiaries.”
The Labor Department said the action comes as part of its ongoing investigation into Enron’s handling of its employee retirement plans. Nearly 20,000 employees lost an estimated $1 billion after Enron declared bankruptcy Dec. 2.
House and Senate committees last week heard emotional testimony from former Enron employees about how the sudden loss of their retirement savings has altered their lives.
Enron’s current pension administrators said they knew of the company’s financial problems, but did not withdraw employee pensions from Enron stock.
Cindy Olsson, an executive vice president of human resources for Enron, testified that Sherron Watkins, an Enron employee who sent a letter alerting executives of a possible financial scandal, approached Olsson and expressed her concerns about Enron’s potentially illegal accounting practices.
Olsson told the House Committee on Education and the Workforce that she spoke with several other retirement plan officials and concluded that Watkins’s warnings about the company’s financial status were not cause for concern.
Olsson said that Enron offered its employees twenty different investment plans for their retirement savings.
Shortly after the hearings, several congressmen urged the Labor Dept. to remove Olsson and other Enron executives, from Enron’s pension administrative committee.
Many ex-employees have filed suit against Enron’s executives and board of directors seeking $1 billion in reimbursement for their lost savings. Following last week’s hearings, lawyers representing former Enron employees said they would ask a Houston court to remove all Enron executives from pension plan administration.
Labor Secretary Elaine Chao told Congress last week that the Bush administration has recommended pension reforms that would allow employees to sell company stock after three years of employment.
President Bush has said he would require companies to notify employees at least thirty days before freezing employee stock savings, and that he would ban executives from selling stock options during periods in which other employees could not sell theirs.
Sens. Barbara Boxer (D-Calif.), Jon Corzine (D-N.J.), and Paul Wellstone (D-Minn.) from the Senate Health, Education, Labor, and Pensions committee have proposed similar pension reforms. They also recommend limiting the amount of company stock within a 401(k) plan, unlike the Bush administration and several Republican Congress members.
Lay expected to take the fifth
Congress will continue Enron hearings this week beginning with former Enron CEO and Chair Kenneth Lay, who was subpoenaed last week after refusing to appear voluntarily.
Lay is scheduled to appear before the Senate Commerce Committee tomorrow, but is not expected to testify like his former colleague Jeffrey Skilling.
“Under the instructions of counsel, Mr. Lay will exercise his Fifth Amendment rights at the hearing Tuesday,” Lay’s spokesperson, Kelly Kimberly, told The New York Times.
Lay’s decision to protect himself from self-incrimination comes after House members grilled Skilling, who briefly served as Enron CEO, about Enron’s financial activities.
Skilling, the highest ranking executive to testify, told the House Energy and Commerce Committee that he was completely unaware of Enron’s inappropriate business transactions and partnerships. But several congressmen said they doubted the veracity of Skilling’s testimony.