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EBSA News Release: [05/12/2004] Contact Name: Lisa
Kruska Phone Number: (202) 693-4676
Secretary of Labor Elaine L. Chao Announces Settlements
Restoring at Least $66.5 Million to Enron Retirement Plans
WASHINGTONU.S. Secretary of Labor Elaine L. Chao today
announced the filing of settlements to restore at least $66.5 million to the
Enron 401(k) and employee stock ownership plans. The proposed settlements,
which must be approved by the court, cover agreements in both the
Departments litigation and the private class action lawsuit brought on
behalf of the plans participants. Neither settlement applies to Enron
Corporation and its former executives and inside directors, Kenneth L. Lay and
Jeffrey K. Skilling.
If approved by the court, these settlements guarantee a
significant recovery for the Enron workers, retirees and their families. We
will continue to pursue additional recoveries and all available remedies to
hold Enron and its executives accountable, Secretary Elaine L. Chao said.
Corporate malfeasance will not be tolerated.
The Labor Departments agreement covers the former outside
directors of Enrons Board. The private settlement also covers the
plans administrative committee and others. In addition to monetary
recoveries, the outside directors are barred from knowingly assuming fiduciary
responsibility with respect to ERISA-covered plans for five years unless agreed
to by the department. Absent settlement, the department will continue its
litigation against the plans administrative committee and will seek
additional monetary recoveries and injunctive relief.
The department sued Enron, corporate directors and the administrative
committee on June 26, 2003, for violating the Employee Retirement Income
Security Act (ERISA). The suit alleges that Lay, Skilling, the former outside
directors and the former members of the administrative committee 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. The board of directors also failed to properly appoint and
monitor a trustee to oversee the employee stock ownership plan (ESOP). Lay was
separately charged with misrepresenting Enrons financial condition to
employees and plan officials and encouraging them to buy the stock.
The settlement resulted from a comprehensive investigation conducted by
the Dallas regional office of the departments Employee Benefits Security
Administration and the Office of the Solicitor.
Chao v.Enron
Civil Action No. H-03-2257/Consolidated with H-01-3913
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