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About Northwest labor press. (Portland , Ore.) 1987-current | View Entire Issue (Aug. 17, 2007)
Enron workers’ case may reach U.S. high court By DON McINTOSH Associate Editor Oregon U.S. Sen. Gordon Smith called on the Bush Administration Aug. 10 to take the side of Enron’s victims in a lawsuit that may end up in the U.S. Supreme Court. Smith made the call after learning that New York-based Center for Justice and Democracy and Oregon Attorney General Hardy Myers would be stag- ing a press conference near his Port- land office, along with two Oregon PGE/Enron workers. The workers were among many who lost their life savings when their 401(k)s, chock full of Enron stock, were frozen as the stock plummeted. The stock price fell when it be- came clear that Enron had commit- ted fraud by reporting fictitious earn- ings. Enron founder Kenneth Lay was found guilty of 10 counts of se- curities fraud, but died in July 2006 three months before he was sched- uled to be sentenced. CEO Jeffrey Skilling was con- victed in 2006 of securities fraud, conspiracy, and insider trading, and sentenced to 28 months in prison. Cooperating with federal prose- cutors, Chief Financial Officer An- drew Fastow pled guilty in January 2004 of wire and securities fraud, and was sentenced to six years in prison. Arthur Anderson, the accounting firm that signed off on the web of improper transactions, voluntarily dissolved in 2002 after it was was convicted of obstruction of justice for shredding documents related to its audit of Enron. But other companies were in- volved, including large investment banks that knowingly participated in the fraud. In Fastow’s words, the banks “would come up with struc- tures and transactions that would help Enron creatively solve its finan- cial reporting problems.” In other words, they loaned money to sham companies they helped create in or- der that Enron could pretend debt was revenue in reports to sharehold- ers. “Enron by itself was a shell,” said AUGUST 17, 2007 OREGON AFL-CIO PGE retiree Gary Kemper (left) and union lineman Roy Rinard call on the Bush Administration to side with defrauded Enron share- holders over the banks that helped defraud them. The officers, executive board and staff extend to all Union Members Labor Day Greetings! Working Together to Make Jobs Better T OM C HAMBERLAIN , President B ARBARA B YRD , Secretary-Treasurer J ENNIFER S ARGENT , Research & Communications Director D UKE S HEPARD , Campaign/Political Director S TEVE L ANNING , Field Rep; E LANA G UINEY , Organizing Coordinator B OB T ACKETT , WIA Labor Liaison; S UE H ARRISON , Secretary; T AMMY A NDERSON , Bookkeeper retired PGE lineman Gary Kemper at the Aug. 10 press conference in Portland. “They needed the banks’ money to do what they did.” Shareholders, including Kemper and other PGE workers who owned Enron stock in their 401(k)s, sued the investment banks in 2002 to re- cover losses, estimated at over $40 billion. Bank of America, Citigroup, JP Morgan Chase, Lehman Brothers, and Canadian Imperial Bank of Commerce settled out of court for $7 billion. But other banks — including Merrill Lynch, Credit Suisse First Boston, and Barclays Bank — re- fused to settle. In March 2007, the Fifth Circuit Court, based in Hous- ton, ruled that the banks weren’t li- able to the victims. So it will be up to the Supreme Court to decide, by setting the legal principle in a related case, Stoneridge Investment Partners v. Scientific-Atlanta, Inc. Myers was among 33 state attor- neys general who submitted briefs in support of investors. Normally, the Securities and Ex- change Commission (SEC) would also intervene on the side of stock- holders in such a case, filing an “am- icus brief” with the Supreme Court. And the SEC voted to do so. But the Bush Administration has refused to allow the SEC to file a brief in sup- port of investors. Kemper, who retired for medical reasons, said he and his wife had wanted to go to the Holy Land when they retired. “Now we’ll have to see it on the History Channel. I’m sure many of those bankers didn’t go through that,” Kemper said, “yet somehow the Bush Administration can side with the banks.” “If I work until I’m 67, I won’t have the money in my 401(k) that I had in 2001,” said PGE worker Roy Rinard, 59. Rinard, a member of In- ternational Brotherhood of Electrical Workers Local 125, estimates he lost close to $500,000 when Enron col- lapsed. “All we’re asking is to have our day in court.” Briefs in the Supreme Court case were due Aug. 15, after this issue went to press. Salem 503-585-6320 Portland 503-224-3169 • Making our voices heard on the issues that affect retirement security • Educating older workers on issues that matter • Keeping Labor retirees connected to their unions 503.284.8591 sdzielak@retiredamericans.org Cement Masons Local 555 Wishes all our union friends a Safe and Happy Labor Day “Building Our Future” 12812 NE Marx Street, Portland, Oregon 503-232-9341 NORTHWEST LABOR PRESS PAGE 15
