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Fallout of Enron's collapse
©Los Angeles Times WASHINGTON -- Retirees and investors who held hundreds of thousands of dollars in Enron Corp. stock tearfully told a Senate committee Tuesday how their life savings were wiped out when the giant energy company plunged into bankruptcy this month. "I thought I had planned for my financial future and for my children and grandchildren," said Janice Farmer of Orlando, who retired from Enron several years ago with $700,000 in her employee stock plan. "Now there is only $4,000 left." Seeking answers to Enron's collapse, members of the Senate Commerce Committee had asked for testimony from the company's chairman and chief executive Kenneth Lay, but Lay chose not to appear in view of nascent inquiries by the Securities and Exchange Commission and the Justice Department. It was the second time in a week that Lay had refused to testify before a congressional committee. Citing a conflict with a creditors' committee meeting in New York, he did not appear before the House Financial Services Committee on Dec. 12. Sen. Byron L. Dorgan, D-N.D., who chaired the hearing Tuesday, said Lay would appear before the commerce committee early next year. At the hearing, Dorgan said the largest bankruptcy in U.S. history "raises many serious and troubling issues." At issue is Enron's decision to freeze the company's 401(k) plan and prohibit employees from selling stock in their accounts. Enron has said that lockdown was the result of a long-planned change in plan administrators, rather than being a reaction to the company's problems, and that the halt was in effect only from Oct. 29 to Nov. 12. But a panel of Enron workers and retirees told the Senate Commerce Committee that the freeze began Oct. 17, the day after Enron disclosed a $1.2 billion reduction in shareholders' equity tied to complex partnerships it had set up. That disclosure sent its stock tumbling. Several retirees said they were unable to sell for a month or more. Enron stock was at $32.20 on Oct. 17; by late November it had fallen to less than $1 a share. It was Enron's retirees and investors who drew most of the committee's attention Tuesday. Mary Bain Pearson, a 70-year-old Houston shareholder, said she had added to her Enron holdings over the years "because I was impressed with what the leaders of the company had to say." Said Pearson, "I didn't lose a billion dollars. But what I did lose was a billion dollars to me." Dorgan, holding up a chart showing stock sales by Enron executives since November 2000, remarked that "a substantial amount of stock was sold by officers, directors and insiders at the time they were urging others to buy stock in the company." Charles Prestwood, a company retiree, said, "I had all my savings in an employee stock plan, and I lost $1.3-million." Prestwood of Conroe, Texas, said he tried to sell shares when prices began to drop in October but was "locked out" from doing so by a company directive. -- Information from the Washington Post was used in this report.
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From the Times Business report Robert Trigaux
From the AP
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