Florida's handling of its Enron stock questioned

By waiting to sell, the state contributed to pension fund losses.

By ALISA ULFERTS, Times Staff Writer
© St. Petersburg Times
published January 26, 2002

TALLAHASSEE -- Lawmakers in Washington, D.C., have convened a half-dozen inquiries to find out how Enron collapsed and why.

But lawmakers in Florida's capital have some questions of their own, such as why did the state wait until the Friday before Enron declared bankruptcy to pull out of the company's stock. The move contributed to the state pension fund's $306-million loss.

While that loss is a small percentage of the fund, it has fueled talk of a possible House select committee to review what happened.

"I don't have any formal plans at this time," said House Speaker Tom Feeney. But he said he is considering having someone look at the matter and he has some questions.

"Certainly we would want to take a very close look," Feeney said. The Legislature doesn't control the $100-billion pension fund, but it does write the pension laws the State Board of Administration must obey.

A spokeswoman said the board would welcome questions about how it handled the matter.

"We'll answer any questions and provide any public records they want to see," Lee Baldwin said.

SBA director Tom Herndon already has appeared before Gov. Jeb Bush, Comptroller Robert Milligan and Insurance Commissioner Tom Gallagher, who sit on the board. He told them last month that although his staff stepped up its monitoring of Enron stock, it never told the investment manager buying the stock for the state to sell.

"In retrospect, I wish we had," Herndon said. The state has since fired that company, Alliance Capital. Even if the state is successful in the federal class-action suit it joined last month against Enron, it likely would recover just 30 cents to 50 cents for every dollar lost.

But Herndon hasn't appeared before the Legislature, which recently rewrote state law to give state employees greater say over their pension investments, a move Herndon had said could overwhelm state workers.

And the state's Enron loss has some lawmakers saying, "I told you so."

"It's an example of why choice is so important," said Rep. Mark Flanagan, the Bradenton Republican in charge of the House Banking Committee, one of several Feeney could choose to lead an inquiry.

If employees had more control over their funds several months ago, they could have pulled their own money out of Enron sooner, Flanagan said.

"I certainly have a number of questions," Flanagan said. "I am ready, willing and able at the request of Speaker Feeney to review the issue."

Rep. Mike Fasano, a New Port Richey Republican who opposed Herndon on the choice legislation, said he agreed with Flanagan that choice is important and was glad that Feeney may ask a committee to look into the SBA.

So is Rep. Frederick Brummer, R-Apopka, chairman of the state Administration Committee. That committee also could ask questions. Brummer said he is curious about the state's handling of its Enron stock.

A Bush spokeswoman said the governor, along with other members of the SBA, has asked for details on the state's loss and doesn't mind anyone's questions.

"There's a lot of issues to be sorted out and a lot of questions to be asked," spokeswoman Lisa Gates said.

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