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Bankruptcy court allows Enron to keep CEO Cooper

A US bankruptcy judge on Thursday cleared Steven Cooper to remain as chief executive of bankrupt Enron Corp after federal regulators dropped their objections to his hiring.

Judge Arthur Gonzalez's ruling clears the way for Cooper, 55, to lead the company through its Chapter 11 restructuring a month after the Securities and Exchange Commission initially called his contract "inappropriate."

"We're certainly happy to have the decision made regarding the contract, and we look forward to focusing on the restructuring," Enron spokesman Eric Thode said.

In early March, the SEC questioned Cooper's $1.3 million salary, a $5 million bonus and his status as a independent contractor, rather than full-time employee, which raised concerns about his fiduciary responsibility. The SEC also said it was concerned about potential conflicts of interest stemming from Cooper's connections with creditors.

The same day the SEC raised its objections, however, Enron filed an amended contract with the court dropping Cooper's bonus and stating that he would be a full-time Enron employee.

The SEC on Thursday said it had no further objections to Cooper's contract. "They gave us pretty much everything we asked for. They met all of our objections," said Neal Jacobson, an SEC lawyer in New York.

Enron attorney Brian Rosen of law firm Weil, Gotschal and Manges said Cooper's role as CEO "was approved with the endorsement" of the SEC and the Florida State Board of Administration, an investor in Enron which also had filed objections.

Cooper was named Enron CEO in late January, six days after the resignation of Kenneth Lay. He is a partner at restructuring firm Zolfo Cooper LLC.

Enron filed for Chapter 11 bankruptcy protection December 2, the largest insolvency case in US history.

DISPUTE WITH LABOR DEPARTMENT

Labor Department officials, meanwhile, were assessing their options in a dispute with the company over whether fees and expenses for an independent firm to oversee Enron's three employee retirement plans should be paid out of the company's funds or from the retirement plans themselves.

The department announced last month that State Street Bank and Trust of Boston would act as independent fiduciary of Enron's retirement plans, for which it will be paid up to $1.5 million a year for up to three years, plus expenses.

At the time of the announcement, the department said that payment of State Street Bank's fees and expenses would come from Enron and not from the assets of the pension plans.

But that arrangement was left in doubt after a bankruptcy court hearing earlier this week.

"We are disappointed with Enron's performance before the bankruptcy court and we've made that clear to them," said Labor Department Solicitor Eugene Scalia.

"We're urging them in no uncertain terms to abide by their agreement to find a way to pay these fees," he said.

"We're continuing to review our options," he added. "Our aim is to see movement on this next week."

Although Scalia declined to describe the options the government could pursue, other legal experts said it could continue to urge the bankruptcy court to rule that payment could come from Enron's estate, or file suit against Enron.

In either case, payment to State Street Bank would likely be made from the pension plan's assets, at least in the interim.

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