Ruined by Enron

Revolutionary Worker #1136, January 27, 2002, posted at

Enron's motto was "Respect, Integrity, Communication and Excellence." Its "Vision and Values" mission statement declared, "We treat others as we would like to be treated ourselves....We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don't belong here."

Now thousands of Enron employees have had their lives shattered by Enron's lies, fraud and--disrespected and abused by Enron's ruthless, callous, arrogant owners.

Some 4,000 to 5,000 of Enron's 20,000 employees have already been laid off, most given a measly severance package of $4,500. Many, even formerly well-paid managers and technicians, aren't sure how they'll survive. One information technology technician who made $70,000 a year at Enron, told the NY Times that when the layoffs were announced, Enron told him he had 30 minutes to clear his desk. "Wrap your life up, and get out," they said.

Thousands more, inside and outside Enron, have seen their retirement savings evaporate. 14,000 Enron employees were in the company 401K plan, and 60% of that 401K money was in company stock. Like many affected by the bust, many middle class Enron employees, as well as many other small investors, had built up sizable paper wealth and hefty retirement packages based on their Enron stock holdings. But now these shares are barely worth the paper they're printed on--their value has fallen almost 99% since mid-2000. An employee who was looking forward to an early retirement with $500,000 in his or her pension suddenly held stocks worth less than $5,000.

One 51-year-old executive assistant, who lives with her mother in a two-bedroom apartment, lost her $49,000-a-year job and Enron stock worth $150,000 at its height. She told the NY Times she'd often worked 12-hour days and skipped lunch to show her loyalty to the company.

What makes all this especially bitter is that employees and investors were repeatedly lied to by Enron executives--who knew the company was going down but desperately tried to prop up Enron's stock prices by convincing employees to keep their shares. To make matters worse, as Enron stock nose-dived, top executives bailed out and made millions, while employees weren't allowed to sell their shares.

It's highly likely that top Enron officials--who knew what the company was doing with its various off-the-books deals--realized the company was in serious danger long before the first public inklings this past October (when, after never reporting a losing quarter, Enron reported a $618 million third-quarter loss). One indication: from 1999 to mid-2001, 29 top Enron directors and executives sold off $1.1 billion of their own stock.

Last August, Enron Chief Financial Officer Jeffrey Skilling suddenly resigned after just six months on the job. And Chairman Ken Lay received a memo from an Enron accountant saying she was "incredibly nervous that we will implode in a wave of accounting scandals."

But instead of warning employees or the public about Enron's problems, Lay lied. In mid-August he emailed employees, "Our performance has never been stronger; our business model has never been more robust; our growth has never been more certain.... I can honestly say the company is in the strongest shape it's ever been in."

On September 26, three weeks before the announcement of Enron's third quarter losses, Lay again emailed employees. The third quarter, he said, was "looking great," and Enron execs "were convinced both by all of our internal officers as well as our external auditor and counsel" that its finances were legal and appropriate, that Enron stock was a good buy, and that employees should "talk up the stock and talk positively about Enron to your family and friends."

Meanwhile, senior executives had been selling off their shares and making millions, even tens of millions of dollars. Chairman Lay cashed in stock and options worth $150 million. Former CEO Skilling earned $62 million. Enron's former financial officer made tens of millions. (One Enron executive put $56,000 on his expense account--in one month.)

On October 26, as Enron began to collapse, management "locked down" Enron's 401K plans, making it impossible for employees to sell their stock. Enron claimed it was simply a long-planned move to "make administrative changes." Some Enron employees were even told the lockdown began a week earlier, on October 19. At that point Enron shares were selling for $30. By the time the lock-down ended on November 13, they were selling for $9.98.

A web designer who lost a $56,000-a-year job and all his benefits told the NY Times, "The upper-level executives got their money... I was let go by voice mail...We don't know how we'll pay our bills." Like other workers, he spoke bitterly about their shattered illusions about Enron: "We put our trust in CEOs. It was a personal thing. You got to see the company grow. I don't think I'll ever trust another company."

Enron is a sharp example of just how volatile the global economy is, and how very fragile things are--even for more highly paid technicians, professionals and middle class folk. For example, according to the Wall Street Journal, workers at scores of big corporations--including Lucent Technologies, Dell Computer, Qwest Communications, International Inc., Rite Aid, McKesson Corp., and Morrison Knudsen--recently lost millions worth of retirement money when their company's stock crashed.

Many politicians, including George W, are now mouthing words of concern for Enron's workers - even though they didn't utter a word of alarm to employees or the public when Enron management called them warning of the company's impending bankruptcy.

Ken Lay told Treasury Secretary Paul O'Neill in October that Enron was teetering on the brink. In an interview on Fox News Sunday, O'Neill was asked why he supposedly didn't alert the White House when Lay called him. O'Neill said flippantly, "I didn't think this was worthy of me running across the street and telling the president." Then he coldly said: "Companies come and go... Part of the genius of capitalism" is that "people get to make good decisions or bad decisions. And they get to pay the consequences or enjoy the fruits of their decisions. That's the way the system works."

This article is posted in English and Spanish on Revolutionary Worker Online
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