February 14, 2002
Chao Names Fiduciary for Enron Plans
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Secretary of Labor Elaine L. Chao has announced that an independent fiduciary will be appointed to replace the Enron Corp.'s administrative committees, whose members currently serve as fiduciary of the company's three retirement plans.
"The workers in these plans have suffered enough," said Chao. "I'm pleased that we have negotiated an agreement that requires the company to pay for the independent fiduciary rather than further deplete employees' retirement savings."
The agreement, signed earlier this week by the Labor Department and Enron Corp., requires Enron to pay the independent fiduciary's fees for three years, up to a maximum of $1.5 million per year, plus associated expenses.
These expenses will include the cost of any related services, such as outside legal or accounting services, incurred by the independent fiduciary. The terms of the contract between Enron and the independent fiduciary may have to be approved by the bankruptcy court.
"The department is transferring control over the retirement plans to an independent expert who can aggressively protect workers' interests during corporate bankruptcy proceedings and maximize the likelihood of recovering funds for the plans," said Chao. "Enron's employees should be confident that their interests will be protected by a fiduciary who is unrelated to Enron."
Under the terms of the agreement, the independent fiduciary will be selected by the department. The independent fiduciary will assume control over:
· Operating the plans and investing plan assets
· Selecting and monitoring plan investment managers
· Investing plan assets currently held in employer securities
· Selecting and monitoring funds offered as investment options under the savings plan
· Implementing procedures relating to pass-through voting of employer securities
· Retaining professional services.
Enron sponsors a 401(k) savings plan, cash balance defined benefit plan and an employee stock ownership plan covering over 20,000 employees. The company filed Chapter 11 bankruptcy on Dec. 2, 2001. The department's Pension and Welfare Benefits Administration opened an investigation on November 16, 2001 to determine whether there were any violations of the Employee Retirement Income Security Act (ERISA) in connection with the operation of Enron's employee benefit plans.
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