Coping with Collapse

JIM LEHRER:

Finally tonight, more fallout from the demise of Enron. A congressional panel today held the first in a series of hearings on the company, one major issue: The treatment of Enron workers. Betty Ann Bowser has been looking into that from Houston, the company's headquarters.

BETTY ANN BOWSER:

This time last year, the Boutcher family was looking forward to Christmas.

MICHAEL BOUTCHER:

Mom's got your new book.

BETTY ANN BOWSER:

Breadwinner Mike had just taken an exciting new job in the risk management department at Enron Corporation, and moved his wife and five kids from Burlington, Wisconsin, to Houston, Texas.

MICHAEL BOUTCHER, Former Enron Employee:

When I came down to interview, my boss… One of his first things were, "if you work at Enron for ten years and you're not a millionaire, then you're doing something wrong because everybody is a millionaire after ten years."

BETTY ANN BOWSER:

Did you buy that?

MICHAEL BOUTCHER:

Absolutely.

BETTY ANN BOWSER:

At the time, Enron was on a roll. As the largest trader of natural gas in the country, with interests in electricity and financial services, the company was the darling of Wall Street. It also had a reputation for taking chances. The Boutchers found that exciting.

MICHAEL BOUTCHER:

We talked about how risky they were, but how exciting the risk was. You're… You're living on the edge. And that was always the case for the year and a half I've been at the company. The risk was something that gave you an adrenaline rush when you came home. You got excited about going to work the next day.

BETTY ANN BOWSER:

What the Boutchers didn't know was that Enron's high-flying style would bring the company to its knees on Wall Street. For years, top brass had painted a rosy financial picture, but a few months ago company stock nose-dived when executives were forced to admit there wasn't enough money to pay the company s bills. It was one of the fastest free-falls in the history of Wall Street. On December 2, the company filed for bankruptcy protection and laid off nearly 4,000 of its 7,000 Houston employees.

Boutcher was one of the first to go. He signed a severance agreement that guaranteed him close to $30,000 as long as he promised not to sue. But when the first check came, it was $1,500 short, and he thinks the next check due in January may not come at all. Right now he has just a $1,000 in the bank, and the landlord is clamoring for rent.

MICHAEL BOUTCHER:

The $1,000… We could give that to him, but then we have to live on the groceries that are in the house, and that won't get us through until the alleged January payment of severance. But you can't take the $1,000 and buy Christmas presents because you've got to put food on the table. I mean, weekly grocery bill's $250. So we're… We're good probably through the end of December if we don't buy Christmas presents and don't pay rent. Without the job I had severance. Without the severance and without a job, you've… It's all about family.

BETTY ANN BOWSER:

How much do the boys understand?

MICHAEL BOUTCHER:

The older ones know that times are tough. I had a talk with Chris and I said, "Stop asking about cars. Stop asking about the extra things. Just need you to keep it cool." The seven-year-olds don't know anything. They really… They just know that daddy doesn't work at Enron anymore, and it's up to me and my wife to shelter them from that.

BETTY ANN BOWSER:

Thousands of other laid off Enron employees are also facing the prospect of a grim Christmas. Last week, they attended a three-day seminar where they got advice on how to find new jobs and how to cope in the meantime.

WOMAN:

This is a card for our 24-hour…

MAN:

Okay.

WOMAN:

…Help line.

BETTY ANN BOWSER:

Many are asking if they should join a class-action lawsuit filed by former Enron employees. An estimated 12,000 Enron people lost over a billion dollars in their retirement portfolios, which the company matched with Enron stock. Fifty-nine year-old Tom Padgett was going to retire from an Enron spin-off company in February.

TOM PADGETT, Former Enron Employee:

This shows where I moved over the funds in 401(k) over to the Enron Corp. Stock.

BETTY ANN BOWSER:

Now he's suing Enron. At one point, his 401(k) was worth over $600,000. Today all that's left is $11,000. Like hundreds of people, Padgett invested heavily in Enron stock, which went from nearly $90 a share to less than 75 cents.

TOM PADGETT:

We were all told that "the company's doing great and we've made so much money this quarter. We've made so much profit, continue to put your money in a 401(k). We expect the stock price to go to $120 a share."

BETTY ANN BOWSER:

This is what they said to you?

TOM PADGETT:

This is what they kept telling us. They expected the stock price to go to $100 to $120 a share by February of this year, 2001. And of course we all know that that didn't happen. So I felt like I would be foolish to take my money out when I stood to gain so much.

BETTY ANN BOWSER:

While people like Padgett held onto their stock, Enron's top executives allegedly dumped millions of shares. Some reports say they made between $50 million to $100 million.

MAN:

They made $58 million and we got nothing. That's disgusting.

ROBIN HARRISON, Attorney:

The suit that we filed is on behalf of the participants in the savings plan.

BETTY ANN BOWSER:

Robin Harrison, Padgett's attorney, says Enron executives were negligent in not telling savings plan participants like Padgett that Enron was in trouble.

ROBIN HARRISON:

Mr. Padgett was entitled to know what the true state of the company was. For the past four years, that has not been the case. The administrators of the plan, the company and the people who oversee the company, were responsible to inform him that, in fact, the company was not performing the way that it was being represented to the public.

BETTY ANN BOWSER:

In October, while top executive were still allegedly dumping their stock, Enron froze buying and selling stock for members of the 401 plan as it changed administrators. The stock continued to plunge during this period, but people like Padgett couldn't do anything about it.

TOM PADGETT:

I blame the corporate management of Enron. I feel like I've been betrayed, not only myself, but everyone that's worked for Enron and given their life and their heart and their soul to the company, that dedicated their self to Enron over the years. I feel like everyone of us has been betrayed. I feel like we've been robbed of our retirement.

BETTY ANN BOWSER:

Both the Labor Department and the Securities and Exchange Commission are investigating alleged wrongdoing by Enron executives, who reportedly received $55 million in bonuses shortly before the company declared bankruptcy. Meanwhile, Enron executives have refused all public comment about the company's problems.