Deal Reached in Enron Pension Claims
Some former Enron Corp. directors have agreed to pay as much as $86.5 million to settle part of $3 billion in employee pension-fund claims linked to the former energy trader’s collapse in 2001.
Under the accord, disclosed in court papers Wednesday, a dozen ex-Enron board members and a former executive have agreed to turn over $85 million in insurance coverage and pay more than $1.5 million individually in a partial settlement of suits alleging fund stock losses in 2001, when Enron filed for bankruptcy protection. The losses came after Enron disclosed that it hid billions of dollars in debt in off-the-books partnerships.
“We settled this part of the case to get some money for victims of this massive fraud now rather than forcing them to wait for the outcome of the bankruptcy case,” said Lynn Sarko, a Seattle-based lawyer representing former and current workers of Enron, which is reorganizing under court supervision.
The accord is conditioned on the willingness of insurers to hand over the $85 million, Sarko said. The insurers issued policies covering directors’ liability for certain conduct.
The settlement, which also resolves a suit filed by the U.S. Labor Department over Enron directors’ failure to protect employees from pension-fund losses, doesn’t resolve claims against Enron or former Chairman Kenneth L. Lay or former Chief Executive Jeffrey K. Skilling, Sarko said.
The pact also doesn’t settle claims against Northern Trust Corp., a trustee for the pension plans, or Arthur Andersen, Enron’s former auditor, Sarko said.
As part of the settlement, former Enron Directors Robert A. Belfer; Norman P. Blake Jr.; Ronnie Chan; John H. Duncan; Wendy Lee Gramm, wife of former U.S. Sen. Phil Gramm; Robert K. Jaedicke; Charles A. LeMaistre; John Mendelsohn; Paulo V. Ferraz Pereira; Frank Savage; John Wakeham; and Herbert S. Winokur have agreed to pay a total of $1.5 million out of their own pockets to compensate Enron workers for 401(k) and other pension-fund losses, Sarko said.
