Laid-off staffers of the collapsed energy trader Enron got some more sour news in their severance checks last month. Though they’d already lost an estimated $1 billion on their 401(k) plans, that didn’t stop the bankrupt company from deducting a final contribution for the retirement accounts.
Some 60 percent of the plan was made up of Enron stock, now valued at pennies a share. The plan was designed so that Enron matched employee contributions not with cash but with its own stock. An Enron spokesman told Money magazine in December that the company never encouraged workers to buy the shares—an assertion contradicted by statements from Chairman Kenneth Lay.
“My personal belief is that Enron stock is an incredible bargain at current prices, and we will look back a couple of years from now and see the great opportunity that we currently have,” Lay told workers in a September 26 online chat obtained last week by Reuters. The company soon began its final plummet, causing many workers to lose their life savings.
Enron is now the target of several congressional investigations, not to mention lawsuits by workers who say executives continued cheerleading for the stock despite having evidence the business was tanking. What’s more, as the firm was falling, Enron froze the assets in workers’ retirement accounts.
In a document for former workers posted at www.enron.com/corp/alumni/faq.html, Enron tells ex-staffers what to do if they haven’t received the $4500 severance payments allowed by the bankruptcy court. It then spells out the deductions taken from that amount. These include “applicable taxes, 401(k) contributions, garnishments” for child support, etc.
The site also gives employees instructions for dealing with banks that won’t accept Enron paychecks and for filing a bankruptcy claim. For those who’ve got more than $4500 coming to them, the future doesn’t look bright. “Employees are entitled to pursue any claims for amounts in excess of $4,500 in the bankruptcy proceeding,” reads the company site. “The court, through the bankruptcy process, will determine the disposition of your claim. Please be aware that these proceedings typically take months or even years to resolve. . . . Filing a claim in no way ensures payment. All employee claims above the $4650 priority employee claim mentioned by Ken Lay in a previous communication are unsecured creditors’ claims in bankruptcy.”
Enron writes that it will allow former workers to keep cell phones “at your own personal expense. You will need to contact your service provider as Enron will be turning off all such service and will no longer pay this expense.” As for PalmPilots, laptops, and other equipment, staffers are to leave those behind in a drop box set up at the company’s Houston headquarters.
See also: “Bush Gave Enron Breathing Room” by James Ridgeway