Enron Looks to the Courts to Force Hewitt to Recalculate Settlement Distributions

July 30, 2007 (PLANSPONSOR.com) - Enron plans to fire the company that miscalculated nearly $22 million of the $89 million initial settlement agreement to its former employees, but the fallen company wants Hewitt Associates to first clean up the mess, according to the Houston Chronicle.

Early in July the news broke that Enron employees might have to give back a portion of the initial payment they were awarded as part of a settlement agreement over losses to their employee stock ownership and 401(k) plans that were brought on by the company’s collapse (See Former Enron Workers’ First Settlement Payments Miscalculated ).

According to news reports, Hewitt had miscalculated nearly $22 million of the $89 million of the initial amount – overpaying about 7,700 employees and short-changing about 12,800.

According to the newspaper, Enron lawyer John Strasburger told U.S. District Judge Melinda Harmon on Friday that Hewitt had used faulty computer software to make the calculations, but the company has been slow in correcting its mistake. Enron is asking Harmon to force Hewitt to recalculate.

Hewitt lawyer Bill Boies told the Houston Chronicle that his client realizes its mistake, plans to fix it and is in the process of doing so.

There is also a dispute over whether Hewitt should be considered a fund administrator or a service provider to Enron. Boies said Hewitt’s issue is being labeled the fund administrator by Enron. He said Hewitt is a service provider to Enron, which is the fund administrator with ultimate responsibility to the court for distributions and for Hewitt’s work.