St. Petersburg Times Online: Business

Weather | Sports | Forums | Comics | Classifieds | Calendar | Movies

Enron's crushing blow

When energy trading company Enron collapsed into bankruptcy in December, the savings and security of thousands of employees and retirees were shattered.

By KRIS HUNDLEY, Times Staff Writer

© St. Petersburg Times, published February 10, 2002

When energy trading company Enron collapsed into bankruptcy in December, the savings and security of thousands of employees and retirees were shattered.

HOUSTON -- Energy giant Enron Corp. offered instant status and plenty of perks to the thousands of workers wooed to its posh 50-story headquarters.

Palm handhelds and laptop computers were handed out like candy. Enron paid college tuition and offered emergency low-interest loans. Any travel was first-class. "We ate at Four Seasons and stayed at the Waldorf Astoria," said Bryan Robins, a former freight broker at Enron. "Never at the Hampton Inn."

The perks carried a steep price. Workdays often stretched from before dawn until well past 9 p.m. One accountant put in so many hours that her salary of $55,000 worked out to less than $5 an hour. The perform-or-die culture included peer evaluations brutally nicknamed "rank and yank."

Those were the good old days.

Enron collapsed into bankruptcy in December, shattering the lives of thousands of employees and retirees. Linda Walker, secretary to Enron executives, was given 30 minutes to vacate her desk -- about a minute for every year of service. Bill Peterson learned he was fired while at home recovering from cancer surgery. Those who survived the mass layoff no longer have such perks as the corporate gym or in-house clinic. Even toilet paper is in short supply.

Houston, a city of 4-million battered by oil busts in the past, can shrug off Enron's collapse, thanks to a diverse base of health care, computer and space-related companies. But the ripple effects are slamming into small businesses that once catered to Enron.

Sara Brook lost $20,000 a year in sales of lunches, cakes and cookies to Enron. Lindsey Advertising, stuck with thousands of dollars in Enron-emblazoned polo shirts, flags and fountain pens, has put them up for auction on eBay. The lunchtime crowds have disappeared from the New York Pizzeria across from headquarters.

Those who devoted their lives to Enron will never be the same. Indeed, some say they weren't surprised when former vice chairman Cliff Baxter killed himself late last month. "This is jump-out-the-window stuff," said Tim Dalton, former Enron security guard.

Many investors and employees are suing Enron, which filed for bankruptcy after disclosure of accounting irregularities decimated its share price. Kenneth Lay, chairman and chief executive of Enron, quit and faces a congressional subpoena. His wife, Linda, went on NBC to say the company's downfall has wiped them out, an assertion few believe.

"I wanted to go through the TV screen for her jugular," said Sherri Saunders, an administrator who worked for 25 years at Enron. "When they move to my apartment complex, then I'll feel sorry for them."

Indeed, Lay's assets include several properties in Houston; Galveston, Texas; and Aspen, Colo., valued at nearly $30-million. In addition, Lay owns about $7.7-million in various stocks, including Compaq Computer and Eli Lilly & Co.

By comparison, here's a look at how others are faring after Enron's collapse.

A new kind of hurt

Bill Peterson was lying on his couch in early December, recovering from cancer surgery, when he got the news that his job at Enron had been eliminated.

"He was on the phone, on hold while the HR woman checked the list," his wife, Cathy, said. "Then he just gave us the thumbs down sign."

It was the second blow in five months for the couple, who learned in July that the lump on Bill's groin was a fast-growing tumor needing immediate treatment. Bill, a 55-year-old tech specialist at Enron, took a medical leave at 90 percent pay, then entered a two-month radiation program that left him bald and exhausted. Surgery was scheduled for late November, just as rumors of his employer's demise reached fever pitch.

"I thought, "Why is the media upsetting these people?' " Cathy recalled. "Then that Monday morning I heard Enron had filed Chapter 11 and I kept waiting for the phone to ring."

Paperwork for extending insurance coverage didn't arrive until mid-January. They had to pay out of pocket for a doctor to care for Bill's legs, burned by the radiation. Prescription costs mounted, and even the $10 parking fee at M.D. Anderson Cancer Center became a burden.

"We've never been indigent before," said Cathy, a tiny blond woman with blood-red fingernails. "It's humiliating."

Bill is regaining strength slowly, deferring the battles with Enron and insurers to his wife of 30 years. Though he has plenty of empty hours, he can't yet return to his hobby of golf because the radiation has left him unsteady on his feet and with no feeling in his fingers and feet.

The couple's comfortable home, where they raised their two children and lived for 15 years, is up for sale. And Cathy is lobbying everyone from President Bush to Oprah Winfrey to pass what she's calling "The Peterson Act" to protect people with life-threatening illnesses from layoff.

With his prognosis 50-50 and a checkup scheduled for mid-February, Bill seems slightly stunned by the sudden turn of events.

"Enron energized you," he said of the job he held for five years. "They really seemed to care for their people."

Millionaire no more

Charles Prestwood, 63, sits at his kitchen table, pulls open a nearby drawer and retrieves a well-thumbed calculator. He put in 33 years as an Enron plant operator.

"When I retired in October 2000, I'd built up a retirement fund worth $1.3-million," he said as his pet chihuahua, Junior, ran in circles around his feet. "I put a pencil to it and figured I could draw my pension, Social Security, pull about $15,000 a year out of savings and still live pretty durn good. I thought I had all the bases covered. But apparently I didn't."

After watching Enron's financial shenanigans wipe out his savings, like "a measured tornado," Prestwood is trying to figure out how to stay afloat. He gets about $1,800 a month between Social Security and his Enron pension. The monthly mortgage on his modest brick ranch outside Conroe, an hour north of Houston, is $750.

Though he retired a millionaire, Prestwood never considered paying off his home, which has 3 acres and a barn for his two horses out back.

"I'm conservative," said Prestwood, whose only splurge when he quit working was to buy a new Chevy Silverado truck for cash. "I figured why cash in a stock that's going up 20 percent a year to pay off an 8 percent house note? I never figured that horse would drop dead on me."

Now his retirement fund is nearly worthless, an 8-acre parcel he owns in east Texas is up for sale and he's on a first-name basis with media types such as Lou Dobbs and James Cramer.

"A lot of people refrain from talking about this," Prestwood said one recent morning between a live appearance on CNN (his third) and a visit from Fox News. A TV station in Denmark has reported his story, as has a newspaper in Hamburg, Germany.

"My goal is for everyone in the world to hear my story. But it sure is a heck of a price to pay for fame."

31 years later, a new beginning

Linda Walker grips her hands and takes a deep breath.

"I'm a prayerful person, and as of today, I still respect Mr. Lay for building the company he did," she says. "But I had to really pray."

Walker, 50 and a single mother, started with Houston Natural Gas as a receptionist in 1970 and watched it grow into Enron.

Jettisoned with more than 4,000 co-workers on Dec. 3, Walker said she should have known the end was near when her boss started printing out her resume. "It just started rolling and rolling and nothing could reverse it," she said of Enron's swift demise.

The $4,500 severance check given to all laid-off employees didn't go far toward covering Walker's car note, rent, credit card debt and utilities. And her 401(k), invested entirely in Enron stock, was nearly worthless.

"I was going to use that money for my son's education and to buy a house," said Walker, whose son is 13 and daughter is 23. "My daughter was adding up what it had been worth and I just said, "Oh my god.' "

Two weeks ago Walker got a slight reprieve. She has been hired as receptionist at the temporary office set up by the city to help ex-Enron employees find work. But only a handful of people wander in each day to surf job sites, put off by expensive downtown parking and the painful proximity to old offices. And Enron, which previously had offices in the space, is slowing yanking out the desks, computers and telephones.

Still left on the walls are motivational posters touting Enron's guiding principles: respect, integrity, communication, excellence.

"Mentally, it was important for me to get out of the house," Walker said as she closed the office one recent evening while fielding cell phone calls from a hungry son and anxious parents. "But it's hard to hit the pavement after 31 years."

Goodbye, early retirement

Candace Womack's doctor warned her in October that the aneurysm on her aorta needed surgical attention. But things were so busy at work that Womack, a tech support staffer at Enron, begged to postpone the operation until year-end.

Then on the morning of Dec. 3, Womack's computer screen suddenly went blank and she and a dozen co-workers were sent home for good. "My blood pressure went down 12 points after I left," said Womack, 51. "The anxiety leading up to our termination was so strong, it was a relief to be fired."

Womack quickly scheduled her surgery before the end of December, so it would be on Enron's insurance tab. But after being released from the hospital on New Year's Day, Womack was on her own. She had to hassle Enron for the insurance paperwork, fill out the forms, then pony up a check for $513 for coverage for herself and her self-employed husband.

A month later, she thinks she has medical coverage but she's received nothing from the insurance company to prove it.

"It's been stressful," she said. "This is the kind of operation that can bankrupt you."

Today Womack takes short walks in her tree-lined suburb west of Houston to regain her strength. Several times a day she uses a breathing device to build up lung capacity. Her voice is still weak from the operation, which paralyzed one of her vocal cords. Her shoulder blade-to-abdomen incision is so tender even lifting her cat is off-limits.

"My illness changed my lifestyle more than anything," said Womack, who had been with Enron for four years. "I was going to retire when I reached 55. That was the game plan. Obviously it's changed."

Switching gears, starting over

Two days after losing his job at Enron, Bryan Robins was in Pittsburgh, nailing down a partner for his new company. Three days later, he and five former Enron employees were back in business, moving ketchup from Pennsylvania, popcorn from Iowa and car parts from Chicago.

For nine months, Robins and his cohorts were caught in the whirlwind of Enron's ambitions. Then they were spit out to start all over again.

In March, Enron acquired WebModal of Dallas, a year-old truck and rail freight brokerage business that needed deep pockets. Enron's plan: Go big fast.

"No expense was spared," recalled Robins, who was used to WebModal's penny-pinching mentality. "And though we weren't yet making money at Enron, there was significant progress."

Then came the Chapter 11 filing and everything froze. Produce, canned food and fireplace logs were held hostage on trucks until someone came up with the cash to pay the carrier. Robins, 29, and his colleagues quickly negotiated a deal with Fort Pitt Consolidators, a rail brokerage in Pittsburgh. They found cheap office space on the outskirts of Houston, brought in computers from home, had 12 phone lines installed and were open for business by the next week.

The transition hasn't been easy. Duraflame Inc., an account worth $100,000 a month, is still angry about being burned by Enron and refuses to deal with its ex-employees. But thanks to a five-city blitz of big customers in January, Robins and his partners moved 400 loads of freight, at about $1,000 each, last month. The spinoff expects to break even in March.

Till then, only one of the six employees is taking a paycheck. Among those going without a salary are Jason Beckstead, a father of four, and Mike Perun, whose wife just delivered their second child.

"We go through the numbers every night and see where we can eliminate expenses," Robins said. "Till we're at the point where we start making money, we'll always have doubts. But when you have house payments and kids, you have to do something fast."

A telling, selling tale

After six years with Enron, John Allario had a six-figure salary and a talent for structuring complex gas and software licensing deals.

Today, working out of his home, he's having a hard time keeping enough large-size T-shirts on hand.

Allario, 38, came up with the idea for a Web site as he was hauling his belongings out of Enron headquarters after being laid off via cell phone. But selling $18 "I got Lay'd by Enron" T-shirts is fast turning into a colossal headache for the former Wall Street investment banker.

He's labeling packages until early morning, schlepping loads to the post office and trying to figure out what to do with all the triple extra-large shirts nobody's ordering.

"I wanted to remind Enron's executives we wouldn't go quietly," Allario said of "I didn't want to run a store."

For the past two months, Allario has also been sucked into the media whirl. He carries two cell phones and juggles interviews with CNN, the Wall Street Journal, Fox News. His plan: tell his story, promote his Web site and get somebody with deep pockets to help him take it to the next level.

"I want to look at the nation of laid-off people as one community," said Allario, who has already added a Kmart T-shirt to his inventory. "The obvious criticism is that people don't want to stay laid off very long."

Or Allario could return to the corporate fast track where he spent 16 years.

"I'm in nowhere land," he said, struck for a moment by an unfamiliar sense of helplessness. "It feels good to work for yourself. But I may become a wimp and go back to corporate life."

-- Times researcher Caryn Baird contributed to this report.

Enron Corp.

Headquarters: Houston

Employees: 19,000 worldwide

What it did: energy and commodities trading and services

Founded: July 1985 through the merger of Houston Natural Gas and InterNorth of Omaha, Neb.

August 2001: Chief executive Jeffrey Skilling resigns after six months; chairman Kenneth Lay returns to the top job

October 2001: Enron releases third-quarter earnings, taking $1.01-billion in charges, and reveals secret partnerships; Securities and Exchange Commission starts formal investigation into the partnerships; chief financial officer Andrew Fastow resigns.

November 2001: Enron admits it overstated its profits by nearly $600-million over five years; Dynegy, a Houston energy company one-fourth Enron's size, says it will acquire Enron, then cancels the deal.

December 2001: Enron files Chapter 11 and fires 4,000 employees; Enron's share price at time of filing had skidded to 26 cents from $85 a year earlier; Congress begins investigating Enron debacle.

© Copyright, St. Petersburg Times. All rights reserved.