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IBEW Members Tell Senators How Enron Execs Stole Their Retirement

January 3, 2002

Two members of the IBEW were among the victims of Enrons meltdown called to testify before a standing-room-only hearing of the Senate Commerce Committee in December.

Robert Vigil and Donald Eri, members of Local 125 in Portland, Oregon, lost retirement savings when the energy giant Enron sank into insolvency last month. Investors, including Enron employees, lost hundreds of millions of dollars in the largest bankruptcy in U.S. history.

In their testimony, Vigil and Eri spoke of what looked like their good fortune in 1997 when Houston-based Enron purchased their utility, Portland General Electric, and the holdings in their 401(k) retirement plans converted to Enron stock.

"Enron was riding high and as we saw the company officers and supervisors investing in company stock, we felt assured that our own investments were solid," Vigil said. "By August 2000, Enrons stock had shot up to an all-time high of $90.56. At that time, my shares were worth $163,000."

Forty-seven today, electrical machinist working foreman Vigil said he had ambitious plans to retire after 33 years with PGE at 55. Now that he lost $163,000 in savings, hes had to rethink his future.

"Ill probably have to work 12 more years before I retire," Vigil said.

Enrons top executives, including the architects of the elaborate financial house of cards erected over the years, sold their stock last year for nearly $90 a share. Then, just as they confessed to hiding huge financial losses, employees were locked out of their 401(k) plans for four crucial weeks in October and November while the stock value plunged to pennies a share.

Donald Eri said working in the utility industry made him wary of electricity deregulation Enron so enthusiastically supported. "But we had no idea how unregulated the industry actually isand that our employers financial dealings would completely escape any meaningful regulatory scrutiny."

Enron Chairman Kenneth Lay, who had been on the witness list for the Senate hearing, did not appear before the committee. Senator Byron Dorgan (D-ND) said Lay was scheduled for another hearing on Enrons collapse February 4.

Senate Commerce Committee members pledged to help make sure no other company would again be able to hide their true financial condition from investors, creditors, auditors and the public.

"Financial statements are supposed to be public and transparent," Senator Dorgan said. "Those that cooked the books made off with a whole lot of money while others got stuck."

Senator Barbara Boxer (D-CA) said she and New Jersey Senator Jon Corzine, a Democrat, will introduce legislation to protect workers from similar fates. The Boxer-Corzine Pension Protection and Diversification Act would limit to 20 percent the investment an employee can have in any one stock in individual account plans and reduce by half the tax deduction an employer can take on a matching contribution to an individuals stock if that contribution is made in stock. The bill also lowers to 35 years of age and five years of service the triggers that allow an employee to diversify his or her investments in an employee stock ownership program.

Many Republican legislators supported attempts by companies such as Enron to trade power unhampered by government interference through years of advocating for electricity industry deregulation. Their voices have been absent on Capitol Hill since Enrons downfall as calls for increasing regulation have heightened.

IBEW Workers Testify Enrons Downfall Cost Them Savings

Opening statement of Sen. Byron Dorgan, Chairman of the Subcommittee on Consumer Affairs

Testimony of Donald Eri

Testimony of Robert Vigil

Enron Web site