The U.S. Department of Labor is suing Enron Corp. and 21 former company officials, including former Chairman Kenneth L. Lay and CEO Jeffrey K. Skilling, for mismanaging two of Enron’s pension plans. The lawsuit seeks a court order requiring the defendants to restore to the plans all losses with interest, forfeit their right to benefits from the plans and be permanently barred from serving as fiduciaries to any plan governed by the federal Employee Retirement Income Security Act (ERISA).

The lawsuit, filed in Houston federal court, alleges that the defendants violated ERISA when they failed to consider the prudence of Enron stock as an appropriate investment for the retirement plans and did nothing to protect the workers and retirees from extensive losses. During the investigation, the Labor Department said it had reviewed more than two and a half million pages of documents, questioned 110 witnesses and issued 78 subpoenas.

According to the Labor Department, more than 20,000 participants in savings and employee stock ownership plans “experienced a substantial erosion of their retirement assets” as Enron imploded in late 2001. Now trading as an over-the-counter stock priced at 5 cents, Enron’s shares in their heyday were trading for more than $80.

Labor Secretary Elaine L. Chao repeated what she had said when the investigation began last year, that “Enron’s employees have gotten the short end of the stick.” She said, “this lawsuit keeps that commitment” to recover losses in Enron’s pension plans.

The lawsuit names as defendants former board of directors Lay, Skilling, Robert A. Belfer, Norman P. Blake Jr., Ronnie C. Chan, John H. Duncan, Wendy L. Gramm, Ken L. Harrison, Robert K. Jaedicke, Charles A. LeMaistre, John Mendelsohn, Paulo V. Ferraz Pereira, Frank Savage, John Wakeham and Herbert S. Winokur Jr. Also named were former administrative committee members James S. Prentice, Roderick J. Hayslett, Tod A. Hindholm, Cindy K Olson, Sheila D. Armsworth and Paula H. Rieker.

“Enron, Lay, Olson and Lindholm withheld information about Enron’s financial condition from other plan officials,” the lawsuit alleges. “The board of directors failed to properly appoint and monitor a trustee to oversee the Employee Stock Ownership Plan (ESOP), leaving the ESOP participants without this legally required fiduciary to protect them. The administrative committee members ignored the repeated warning signs of the corporation’s financial troubles, ignored the fact that the stock plummeted in value throughout 2001 and failed to consider reducing or eliminating the plan’s investments in Enron stock.” Lay also was charged with misrepresenting Enron’s financial condition to employees and plan officials.

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