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New Enron Management Sues Investment Banks - 2003-09-29

The new management of the energy trading firm, Enron Corporation, is suing six large investment banks and their subsidiaries for conspiring with former Enron executives to hide practices that led to the company's collapse in November 2001. Hundreds of Enron employees who lost their jobs when the company failed are worried that they may be left out of any settlement of the firm's debts.

The latest Enron legal actions target several financial institutions, including J.P. Morgan, Citigroup and Merrill Lynch, seeking to recover $3 billion from questionable financial transactions between the banks and former executives of the bankrupt company.

The law suits are based on information from a report issued in July by a bankruptcy court examiner that listed transactions the banks engaged in while in full knowledge that the company was insolvent. Among the Enron executives mentioned in the lawsuits are former Chief Financial Officer Andrew Fastow, who is facing trial for dozens of charges related to the Enron collapse and former Enron Treasurer Ben Glisan who recently pleaded guilty to conspiracy and was sentenced to five years in prison.

Diana Peters is a member of a former Enron Employees group seeking restitution through the courts and is also on the employees' committee of the bankruptcy court proceeding. She says the more than 1,000 employees in her group fear that the lawsuits will distribute money to creditors and stockholders, but not to the workers who lost their jobs, their benefits and their pensions.

"I do not think that any of the employees, any of us, feel that we will ever see anything close to what we ever had," she said. "The attorneys, the big people working at Enron, they are going to have a nice little tidy sum, but the rest of us are going to walk away with nothing like we did on the day they let us go."

Ms. Peters says she does not blame all top executives for what happened at Enron, but she does think some of them should go to prison to set an example for other American corporate leaders who might be tempted to commit crimes. She says Enron in its heyday was a dynamic, creative place to work. She says the work experience has helped about 500 of the former employees to start their own businesses.

"I guess that is the one thing you can say. No matter what happened, Enron gave us survival skills and a lot of knowledge and a lot of creativity," she said. "That was the one thing that Enron gave us and no one can take it away from us."

Former Enron employees are involved in two class action suits against the company in Federal District Court in Houston. They are also seeking compensation from the bankruptcy proceedings, which are likely to continue for many months to come.