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Thursday, 10 January, 2002, 23:14 GMT
Enron probe won't restore pension funds
Enron graphics
Enron workers have seen pensions dwindle to nothing

In ordering the US government to review pension regulations and corporate-disclosure laws, President George W Bush has sought to further distance himself from Enron's woes.

But neither soothing words from the president nor an investigation by the Department of Justice (DOJ) will result in former employees of the energy firm getting their retirement money back.

President George W Bush
Mr Bush has ordered reviews of pension and corporate disclosure rules
Enron employees, whose pension scheme - or 401(k) plan, as they are sometimes called - consisted mainly of Enron stock, have lost as much as $1bn (700m) in funds.

Under the scheme employees' retirement plans, 62% of the contributions consisted of Enron stock, which traded as high as $83 a year ago but have since fallen to below 70 cents a share.

Freezing shares

Enron employees lost billions of dollars when the company barred them from selling its shares contained in retirement accounts as they plummeted in value.

When Enron shares started to tumble during the autumn months, the company's management moved to restrict employees from moving the assets of their retirement plan.

Enron effectively froze the shares by imposing technical rules, prohibiting employees from trading their shares.

In doing so, Enron prevented a probable massive sell-off of its shares. It is akin to what an economically stricken country might do to prevent a run on its banks.

It underscores the need for pension reform in the US, says Eli Gottesdienes, attorney for the Enron employees.

Criminal probe

While some may welcome the government's involvement in sorting out the case against the energy-trading giant, Enron employees may become marginalized in the process.

"It makes it more difficult in the immediate sense for us to pursue our civil litigation because when a criminal probe starts, typically judges will defer to prosecutors and defendants in this case," Mr Gottesdienes.

Those defendants include Enron's top officials, including its chief executive Kenneth Lay and former chief financial officer Andrew Fastow.

Despite the possible downsides, Mr Gottesdienes told BBC News a criminal investigation is likely to move more quickly and carry more weight.

Political costs

What has become obvious to Americans is more Bush administration officials have some involvement with Enron than with any other US corporation.

"Their political interest is in not having Enron hung around their heads," says Michael Wolff, media columnist for New York magazine.

Bush officials will seek to manage the administration's relationship to Enron's collapse, he says.

It is a move made somewhat necessary by election-year politics and Mr Bush's desire to be perceived as a friend of the working class.

But Mr Bush has a long way to go to repair the trust Americans now have in 401(k) retirement schemes.

His efforts are doubly difficult given recent congressional testimony by Enron employees who tearfully described how their life savings have been reduced to near nothing after Enron shares in recent months.

While Enron employees' experience may be extreme, many Americans can empathise with the losses, having watched the value of their retirement portfolios dwindle in the wake of the tech-stock shakeout.

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 ON THIS STORY
Lawyer for Enron employees Ron Kilgaard
"What our folks really need is their retirement money"

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10 Jan 02 | Business
10 Jan 02 | Business
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