DOL Unhappy over Enron's Fiduciary Deal Flip-Flop
“I called Enron’s general counsel at 9 am (Wednesday) and made it crystal clear ? that we expect them to abide by the agreement they signed, and if I were in Enron’s shoes, this isn’t the way I’d be dealing with the government right now,” Labor Solicitor Eugene Scalia told The New York Times. “The representations made by Enron’s attorneys in federal court (Tuesday) were a contradiction and repudiation of the agreement Enron signed with the federal government.”
Among other things, DoL officials say Enron’s abrupt turnaround will delay transferring the pension plans and their assets into independent hands.
Enron Fights a ‘Tax’
This week, Enron lawyers complained to a US Bankruptcy judge that forcing the once giant Houston energy trader to pick up the tab for State Street’s efforts amounted to an unfair “tax”.
Under the agreement announced March 14, Enron was to pay a maximum of $1.5 million annually plus expenses for State Street’s activities in running Enron’s three retirement plans.
The three retirement plans have combined assets of more than $2 billion, according to government and company officials.
Also Wednesday, Daniel Weiss, the spokesman for Representative George Miller (D – California), the senior Democrat on the House Committee on Education and the Workforce, accused Enron of “hoodwinking” the government and urged the DoL to take action.
“The same pension administrators are in place who were there during the downfall of Enron, when they said not one word to employees in the retirement plan about the declining financial condition of Enron,” he said.
Miller is one of a number of lawmakers who is sponsoring pension reform legislation in the wake of the Enron debacle (see more on Miller’s proposal ).
Conflicts of Interest
In a second developing Enron matter this week, the Securities and Exchange Commission (SEC) said that it would ask US Bankruptcy Judge Arthur Gonzalez, who is hearing the Enron bankruptcy case, to appoint an independent examiner with expanded powers.
The independent examiner would investigate Enron’s collapse and potential conflicts of interest in the bankruptcy case, according to the Times.
The SEC said that it was supporting a move by a group of creditors, including various pension and retirement funds, because of widespread accusations of conflicts of interest involving companies with longstanding ties to Enron.
According to the Times report, those with possible conflicts are Wall Street banks Citigroup, Credit Suisse First Boston, and JP Morgan Chase.
“We support the appointment of an examiner because an independent person with no relation to the transactions could investigate and report back to the court on whether there is money available to pay investors and other estate creditors,” said Alistaire Bambach, an SEC enforcement official.
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