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Enron employees file suit as Lay's wife cries poor

Former employees of Enron Corp who lost millions of dollars in retirement funds when the energy trading giant collapsed sued on Monday, while the wife of former CEO Kenneth Lay sobbed on national television and said her family has lost its fortune.

The lawsuit, filed by about 400 current and former Enron employees in federal court in Houston, charges that employees were encouraged to invest in Enron stock without being notified of the company's "precarious" financial condition, lawyers said on Monday.

The lawsuit names as defendants former chairman and chief executive Lay; Jeffrey Skilling, another former CEO; and Andrew Fastow, the former chief financial officer, and says that the three reaped a total of almost $200 million from the sale of their Enron shares. Other defendants include the Northern Trust Co, the retirement plan's trustee, and accounting firm Andersen, which had been Enron's auditor.

"Enron executives were profiting from an elaborate shell game, using the hard-earned retirement savings of their loyal employees," said Randy McClanahan, a lawyer for the employees.

'HONEST' AND 'DECENT'

But Linda Lay, in an interview with NBC's "Today" program that was taped at her home in Houston over the weekend, said her husband had been grossly misunderstood and was a victim of "mass hysteria."

"Nobody even knows what the truth is yet. The only thing I know, 100 per cent for sure, is that my husband is an honest, decent, moral human being who would do absolutely nothing wrong," she said.

Linda Lay, who broke down in sobs as she recalled how her husband had told her shortly before Enron's collapse he could not turn the company around, said she could understand the anger and loss felt by employees when they recalled her husband's earlier, publicly upbeat attitude toward the company.

"If I were back there listening to all the things that were being said I would absolutely have to say, 'What is wrong here? How can all of this be happening without someone doing something terribly wrong?'" Linda Lay said.

But she said there were many things her husband had not been told that would come out in the investigations now under way.

Asked what had happened to the reported $300 million in compensation and stocks her husband earned over the past four years, Linda Lay said the couple relied on now-worthless Enron stock.

"Everything we had mostly was in the one stock," she said. "Other than the home we live in, everything else is for sale. We are fighting for liquidity. We don't want to go bankrupt."

Shares in Enron, which filed the largest US bankruptcy ever on December 2, traded at more than $90 in August 2000 but now trade over-the-counter at about 45 cents.

WHITE HOUSE REFUSAL

Enron and its longtime auditor, Andersen, are now both being investigated by at least eight congressional committees and the US Securities and Exchange Commission, as well as a criminal probe by the Justice Department.

President George W Bush dug in on Monday for a court fight with Congress over his refusal to turn over documents detailing any involvement by Enron and other companies in the development of White House energy policies.

"Enron made contributions to a lot of people around Washington, DC, and if they came to this administration looking for help they didn't find any," Bush said.

Earlier, White House spokesman Ari Fleischer dismissed suggestions that Bush or Vice President Dick Cheney give ground to the General Accounting Office, Congress' investigative arm, which has threatened to sue the White House for the documents.

Enron was Bush's biggest financial backer in the 2000 presidential campaign, and Enron representatives met six times last year with Cheney or staff involved in crafting the energy plan, which critics says contained many provisions sought by the energy giant.

Meanwhile, the head of Andersen said on Monday that the Big Five accounting firm would survive, despite having lost business because of its association with Enron. Andersen was fired by Enron earlier this month.

"We will survive," Andersen chief executive Joseph Berardino told a news conference at the company's headquarters in Chicago. "People know us. People respect us. Will we lose business? Absolutely."

He said that some clients had defected, but declined to be specific.

Berardino said Andersen wanted to find out what its auditors knew about Enron's troubles and when they knew, but he said Enron's collapse was due to bad investments, not bad accounting. He admitted that Andersen had reviewed the off-balance-sheet partnerships that hid huge amounts of Enron debt, but said the partnerships were created by Enron and its investment bankers.

ENRONONLINE TO RESUME BUSINESS

But even as probes into Enron's collapse continued, other companies were moving to breathe new life into some parts of the former energy giant's business.

UBS Warburg on Monday said it hoped to have a renamed EnronOnLine, the bustling energy trading system once at the center of Enron's empire, back on line in February.

"We hope to close the deal in early February. We want to have the operation up and running as soon as possible after that," said UBS Warburg spokesman David Walker.

Earlier this month, Enron agreed to sell its North American gas and electric trading operation, which represented most of its $101 billion in revenue in 2000, to UBS Warburg, a subsidiary of Swiss bank UBS AG.

In India, bidders were lining up for Enron's $2.9 billion power project in Dabhol, Maharashtra, and Gaz de France said it would find a partner for a joint bid.

Jacques Gautier, project director of Gaz de France, said the French utility is interested in the liquefied natural gas portion of the project, but not in the electricity market.

The project that has lain idle since June due to a dispute over the cost of power provided to its sole customer, a nearly bankrupt state utility, the Maharashtra State Electricity Board.

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