Mismanagement

The estate of Enron Corp. founder Kenneth Lay has agreed to a $12 million settlement with the U.S. Department of Labor over the alleged mismanagement of Enron’s pension plans. The final settlement may fall below the full amount and will depend upon the total amount of assets in the estate, government officials said. The Labor Department sued Enron and 21 former company officials, including Lay and former CEO Jeffrey Skilling, in June 2003, seeking to require the defendants to restore all of the losses with interest to two of Enron’s pension plans (see Daily GPI, June 27, 2003). The plans had been governed by the federal Employee Retirement Income Security Act (ERISA) More than 20,000 participants in Enron’s savings and employee stock ownership plans “experienced a substantial erosion of their retirement assets” when the company declared bankruptcy in December 2001, the Labor Department noted. With the agreement with Lay’s estate, Skilling is the only defendant who has not settled, the government said. Skilling is scheduled to be sentenced to federal prison in October following his criminal convictions related to his misdeeds at Enron.