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The Associated Press
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February 7, 2002, Thursday, BC cycle
SECTION: Business News
LENGTH: 729 words
HEADLINE: Former employees steam over handling of Enron retirement funds
BYLINE: By DAVID KOENIG, AP Business Writer
DATELINE: DALLAS
BODY:
Former Enron employees are angry that company executives debated whether to delay freezing their retirement accounts last year - then imposed a lockdown anyway, blocking workers from selling their stock.
By the time the lockdown was lifted and employees could sell the Enron stock in their retirement plans, the shares had lost much of what little value they had held, that it practically erased the retirement plans of people like Angelina Lorio.
Lorio was incensed this week to hear the Enron official responsible for retirement plans testify that she was warned of accounting irregularities that could undermine the company, but disregarded them.
"She should have told the employees - made an announcement about it," said Lorio, a 56-year-old clerical worker. "We still would have taken a big loss, but we would have had more than what was left after the lockdown."
Lorio figures she lost $500,000 worth of stock and options in the company's collapse. She has some savings left only because a broker urged her last year to diversify.
Enron's stock price was already sliding when the company notified employees and retirees that it would prohibit changes in retirement accounts while it brought in a new outside company to administer the accounts.
Such blackouts are common in retirement plans, but in Enron's case, the timing added insult to injury for participants who were heavily invested in Enron stock. They had already seen the shares plunge from
$90 to $26.05 on Oct. 19, which a company e-mail implied was the start of the lockdown.
The shares fell even future, to $16.41, when the moratorium actually began on Oct. 26. When the moratorium was lifted on Nov. 13, the shares opened at $9.24.
Cindy Olson, Enron's executive vice president for human resources, told a Senate committee Tuesday that company officials debated at the last minute whether to delay the moratorium. She said officials decided to go ahead with the lockdown because it would be too difficult to notify workers and retirees of a postponement.
More alarming to plan participants and their lawyers, Olson also testified that Enron executive Sherron
Watkins told her in August about accounting practices that could destroy the company. Watkins expressed the same fears in an anonymous letter to then-chairman Kenneth Lay, leading to an investigation by Enron's outside lawyers.

Watkins' fears turned out to be prescient, but Olson said she wasn't convinced at the time and didn't think it was necessary to tell retirement-plan participants of questions concerning Enron's finances.
Eli Gottesdiener, a Washington attorney suing the company on behalf of employees and retirees who had 401(k) retirement plans at Enron, charged that Olson was more concerned with protecting Enron than fulfilling her fiduciary duty to employees and retirees. He said Olson should have ordered the liquidation of all Enron stock in the 401(k) plan.
"This woman is sitting on information that was screaming out to her, 'Get out of Enron stock,'" he said.
Gottesdiener said Olson's decision against notifying employees contrasted with her actions - she sold
$6.5 million worth of stock, mostly in early 2001.
An Enron spokesman said Olson handled the lockdown properly and dismissed the notion of selling
Enron stock held in employees' 401(k) plans based on Watkins' warning about Enron's finances.
"Give me a break. I don't think she had the authority, nor do I think anyone wants to vest that much authority in one person, to make investment decisions on the fly for thousands of people," said the spokesman, Mark Palmer.
Some former Enron employees denounced Olson and other officials on Internet message boards.
Others watched the congressional hearings on television and stewed.
Sue Nix, a 57-year-old accounting specialist who was laid off Dec. 3, the day before Enron filed for bankruptcy, joined Enron six years ago because it offered a retirement plan.
Nix said she didn't understand why Enron wouldn't let her touch her savings during the lockdown, but had always trusted the company. When the lockdown period was over, she had lost most of the $40,000 of stock in her 401(k) plan.
"I don't see any way I can retire now," Nix said. "I see myself when I'm 70, working in the local grocery store or in some office, if they'll have me."