Enron Spin Cycle

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.

Meanwhile, the White House has come under increasing pressure from Congressional investigators to disclose information about meetings with Enron executives during the formulation energy policy.

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. Other defendants include the Northern Trust Company, 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, one of the lawyers for the employees.

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 percent 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. "Those things will all come to light and that's what we're all praying for."

Full Coverage

  • The Enron Effect:
    Campaign finance reform
  • Double Disaster:
    Couples hit hard
  • The Bush Agenda:
    Overshadowed by Enron
  • CBS Poll:
    Who's to blame?
  • The Employees:
    Joining the legal fray
  • The Whistleblower:
    Her memo sounded the alarm
  • Taxing Times:
    Did Enron pay fair share?
  • Commentary:
    Too serious for scandal
  • Online Auction:
    Ex-workers selling souvenirs
  • Investigation:
    Payoffs under scrutiny
  • Big Money:
    Lavishing the lawmakers
  • Analysis:
    Same old story

  • 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 U.S. bankruptcy ever on Dec. 2, traded at more than $90 in Aug. 2000 but now trades over-the-counter at about 45 cents.

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

    President Bush prepared for a court fight over his refusal to turn over documents detailing any involvement by Enron and other companies in the development of White House energy policy.

    Vice President Dick Cheney on Sunday defended President Bush's right to withhold the information, prompting accusations by some Democrats of White House stonewalling. At issue are details of meetings Cheney or members of his energy task force held with officials of Enron while the energy policy was being formed.

    The General Accounting Office -- the investigative arm of Congress -- has asked for details of those meetings. But Cheney has refused and the issue is expected to be settled in court.

    White House critics want to know how much input Enron executives, such as Kenneth Lay, may have had on the formulation of the bush administration's energy policy. Lay is the largest individual political contributor to President Bush since he first ran for office in Texas.

    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 tclose 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 Dabho, India, 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.

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