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Enron's collapse hits state
By ALISA ULFERTS TALLAHASSEE -- The collapse of Enron, the nation's leading trader of electricity and natural gas, could cost Florida's employee pension fund more than $200-million. The state will go to court to get it back, although it would join a long line of unhappy investors and creditors there. "We are going to pursue litigation," Lee Baldwin, spokeswoman for the State Board of Administration, told the Associated Press. The board oversees the state's $100-billion pension fund. Enron spokeswoman Karen Denne would not comment Tuesday. Houston energy giant Enron Corp., which had been in the forefront of energy development and trading, filed for bankruptcy protection this month in one of the largest corporate bankruptcies ever. That left the state holding 9-million shares of the company's near-worthless stock, which translates into a loss of roughly $200-million, Baldwin said. Enron stock closed Wednesday at 72 cents a share, down from a 52-week high of $84.88. Baldwin said the projected loss amounts to just three-tenths of a percent of the pension fund's worth and that state employees and retirees need not worry. Nonetheless, the state has its eye on a Dec. 21 deadline to join a federal class-action suit, Baldwin said. Enron already faces a shareholder lawsuit that accuses 29 Enron officers and directors of engaging in "massive insider trading" and making "false and misleading" statements about the company's financial performance while selling about $1.1-billion of stock over the past three years. Just days before Enron filed for bankruptcy and laid off 4,000 people, it paid out $55-million in bonuses to about 500 employees, the New York Times reported. The pension fund's investment in Enron is ironic because Florida has little of the energy deregulation in which the Houston company was a leading force. Enron was among the leading players in California's energy deregulation scheme, which collapsed in a morass of blackouts and soaring utility bills. If Florida sues Enron's top executives, it will be going after people with close ties to Jeb Bush's brother. Enron was one of the largest contributors to President Bush's campaign. And company officials enjoyed wide access to the White House when Bush drafted his energy policy this year. In Florida, the company contributed almost $30,000 to the Republican Party of Florida during the 2000 election cycle. But the lawsuits might not end with Enron. Some investors are talking about suing Enron's accounting firm, Arthur Andersen, for failing to pick up on the company's financial woes. "Of course, Arthur Andersen could be a target" of a lawsuit, said Insurance Commissioner Tom Gallagher, a member of the state Board of Administration. Gallagher also said he wants to know whether the fund managers the state hired to make investment decisions could have or should have seen Enron's bankruptcy coming and pulled the state out in time. "Those are issues the staff will look at and act accordingly," Gallagher said. -- Times researcher Cathy Wos contributed to this report, which included information from Times wires.
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From the Times Business report
From the AP
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