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Enron executive touted stock for pensions-lawmaker

A videotape obtained by congressional investigators shows an Enron Corp executive telling employees it was okay to put all their retirement savings in the stock of the now-bankrupt energy trader, according to a lawmaker involved in the probe.

California Democratic Rep Henry Waxman said in a letter written on Thursday the tape "seems to contradict" the recent congressional testimony of Enron human resources executive Cindy Olson, who expressed support for diversification and independent advice for retirement plan participants.

"A videotape of a 1999 Enron employee meeting that I have obtained shows a woman who appears to be Ms. Olson telling employees that they should 'absolutely' invest all of their 401(k) savings in company stock," Waxman wrote in the letter to Sen Joseph Lieberman, a Democrat who chairs the Senate Governmental Affairs Committee.

The woman identified in the videotape as "Cindy" also asked the men on the podium whether they agreed with her, and former Enron chief executive Jeffrey Skilling nodded his head in agreement, Waxman said.

Enron's attorney in Washington could not be immediately reached for comment.

Enron stock was one of several options in the company's 401(k) retirement plan, but over 60 per cent of the assets in the plan were invested in Enron, and employees were prohibited from selling during part of the time the stock price was crashing last year.

Thousands of employees saw their savings wiped out, and Enron filed the biggest bankruptcy in US history on December 2. The Labor Department said earlier this month it would replace officials overseeing Enron's retirement plan with independent trustees.

OLSON SOLD STOCK THREE MONTHS LATER

In testimony to Lieberman's committee, Olson reported that she had sold 83,000 shares of Enron stock for around $6.5 million. Waxman noted that she had sold over $1 million of this stock on February 16, 2000 -- less than three months after the employee meeting caught on the videotape.

"If the woman on the videotape is indeed Ms Olson, her personal transactions would contrast sharply with her advice to Enron employees that they should 'absolutely' invest all of their retirement savings in Enron stock," Waxman added.

In her testimony to Lieberman's committee, Olson suggested Enron would have encouraged employees to diversify their holdings had it not been legally prevented from giving investment advice, and she said she would like to see the law changed to allow employers to give that advice.

"We tried to talk about diversification with respect to choice in the 401(k), but there's a fine line that employers have with respect to giving investment advice. And so we were concerned about stepping over that line," she said.

Another lawmaker wrote to Labor Secretary Elaine Chao this week to ask her to launch an investigation into whether members of the pension board of another collapsed company, Global Crossing Ltd, may have violated their fiduciary responsibilities to the company's employees.

Rep George Miller, a California Democrat, said it appeared that Global Crossing executives, like Enron executives, had made "lucrative transactions" while retirement plan investors were prohibited from rescuing their savings and saw them wiped out as the stock price sank.

"It has been reported that Global executives have generated some $1.3 billion in stock sales over the past three years -- an amount that exceeds Enron Corporation insider stock sales," Miller said.

Diversification of retirement savings is a basic element of sound investment device, said Barbara Roper, director of investor protection at the Consumer Federation of America.

"You'll typically hear that you need ten to twenty stocks spread over a variety of sectors," said Roper, adding that concentrating investment in the stock of your employer was particularly risky.

"These Enron employees have lost their jobs and their retirement savings have vanished," she said.

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