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June 03, 2002
Enron Reverses Itself on Pensions
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er waffling on the issue in early April, Enron is now eager to pay an independent manager almost $6 million annually to handle employee-retirement plans, company lawyers told a federal judge last week.

The lawyers told the judge, who is overseeing Enron's bankruptcy proceedings, that it will go along with the U.S. Department of Labor's request that it pay Boston-based State Street Bank & Trust to manage three employee plans with about $1 billion in assets.

As the Associated Press notes, Enron had agreed to remove its in-house managers and hire State Street as part of a deal to end a Labor Department investigation into the decimation of the company's retirement plans when Enron collapsed last year.

But Enron balked at paying State Street, saying it was not an expense essential to the operation of the business. If the company doesn't pay, the fees would be assessed against current and former employees still in the plan.

U.S. Bankruptcy Judge Arthur Gonzalez ruled in April that Enron did not have to pay State Street's fees and legal expenses. But the Labor Department told the company other government agencies - including the Securities and Exchange Commission, the IRS and Justice Department - might be asked to investigate the retirement plans.

Enron lawyer Martin Bienenstock said the decision to pay the fee was simply good business, not concern about government action. He added that not paying the fees, which could reach $160 annually per worker, would give current employees more reason to leave a company that already faces an alarming attrition rate.

But the official creditors committee, which opposes any payment to State Street, blasted Enron's reversal and intimated that the government had strong-armed the company.

A hearing on the request to pay the fees was tentatively scheduled for June 12. But it could be delayed while creditors wait for the requested documents and examine them.

To view the Associated Press article, via the Washington Post, click here.

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