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Enron Corp. and some former executives violated pension laws by allowing employees to accumulate overpriced company stock in retirement plans that collapsed with the company, the Labor Department charged Thursday. Labor Secretary Elaine Chao said a federal lawsuit being filed by the department was designed “to recover losses that Enron employees suffered due to the mismanagement of Enron’s two pension plans.” “This action will strengthen the American work force’s confidence in their retirement savings,” she said in announcing the action. The lawsuit, filed after a 19-month investigation by the Employee Benefits Security Administration, names former Enron Chairman Kenneth Lay and former chief executive Jeff Skilling, among others. Among the defendants are the former directors of now-bankrupt Enron, who include Wendy Gramm — former head of the Commodity Futures Trading Commission and wife of former Sen. Phil Gramm, R-Texas. It seeks to have the defendants barred from any future positions of responsibility as trustees of pensions funds and, in some instances, seeks financial damages from them. Congressional leaders praised the action. “The department’s action puts corporate executives and pension plan administrators on notice: take your fiduciary duty to act in the best interests of your workers seriously or the Labor Department will hold you accountable,” said Rep. John Boehner, R-Ohio, chairman of the House Education and Workforce Committee. Word of the lawsuit followed a decision Wednesday by federal energy regulators to bar Enron from competitively selling electricity and natural gas in the United States. More than 20,700 participants in Enron’s 401(k) plan had nearly two-thirds of their assets invested in company stock. Accounting problems caused the stock to plummet in value, ultimately bankrupting the company in December 2001 and siphoning the retirement savings of thousands of workers. Pension laws require trustees to act in the interests of plan participants. “After a long delay, the Labor Department appears finally to be taking a strong action against Enron regarding the enormous losses its employees suffered in their retirement accounts because of corporate abuse,” said Rep. George Miller of California, the top Democrat on the House committee, who had been pressing the department to act. With help from the AFL-CIO, about 4,000 former Enron employees eventually received up to $13,500 in severance pay as part of a $29 million deal approved by a bankruptcy judge. Relief from Congress to recoup the retirement losses never materialized, and pension legislation to protect workers from similar cases also died. The Labor Department succeeded in wresting control of the retirement plans from Enron executives and installing a private company as trustee. The lawsuit was filed in U.S. District Court in Houston, where Enron is based. Copyright 2003 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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