A new report suggests that corporate scandals such as Enron and WorldCom have clipped 401(k) accounts to the tune of roughly $175 billion, while public pension funds have been hit for another $6.4 billion.
The report issued by the “No More Enrons” coalition, partially funded by consumer groups and labor unions, also estimates that more than a million workers lost their jobs at the affected companies, while company executives cashed out billions of dollars of their stock.
The Institute for America’s Future report breaks down, state by state (based on the percentage of individuals in each state covered by retirement programs), the impact to 401(k) balances.
In addition, the report details the losses incurred by state pension funds as a result of the scandals, based on “various sources.” Topping the Institute’s list is California, with some $1,150,000,000 lost, followed by New Jersey’s $1,000,000,000. Least impacted, according to the list, was Kansas, which suffered a loss of “just” $1,200,000.
The report put together data from government and other public sources to detail the impact of accounting failures at firms such as:
- Arthur Andersen LLP
- Global Crossing
- Adelphia Communications
- Tyco International
- Qwest Communications
The $200 billion total is “an extremely conservative estimate,” said Mike Lux, president of American Family Voices, part of the “No More Enrons” coalition. It was just a year ago, on October 16, that Enron reported a $638 million third quarter loss, while also disclosing a $1.2 billion reduction in shareholder equity, partly related to partnerships run by chief financial officer Andrew Fastow.
The report also identified nearly $13 billion in lost federal tax revenue from companies with questionable accounting practices underreporting their profits to the IRS.
The report is HERE