CBSN

Enron Workers Went Down With Ship

Enron Corp. retiree Charles Prestwood stands with his two horses as he talks about his disappointment in his former employer Friday, Jan. 11, 2002, at his home in Conroe, Texas. After working 33 years in the energy industry, Prestwood watched as his retirement account was almost completely obliterated when Enron stock plummeted this past fall. The peak value of Prestwood's account was about $1.3 million.
AP
Thousands of Enron employees lost their investments, savings and retirement portfolios in the collapse of the energy trading giant.

Congressional committees as well as the Justice and Labor departments want to know why many senior Enron executives and board members sold their stock when it was still valuable, while workers were barred from selling stock in their 401(k) funds.

"We had great trust, great loyalty," said Charles Prestwood, 63, who retired as a plant operator in 2000. "We were trained loyalty above everything. And we were loyal."

"We had no idea the books were messed up," Prestwood said. "When you're locked in and sit there crying and watching it melt down, something you've devoted your whole life to building, it's sad."

Enron chairman Kenneth Lay "was like the Pied Piper. We followed him like lemmings into the sea," said Deborah DeFforge, who might have to leave Houston for the West Coast to find work.

DeFforge is a plaintiff in "every suit I can get my hands on" and doesn't want to rest "until they're behind bars."

But at least one person at Enron suspected the company's books were not in order before the collapse.

Detailed concerns about accounting practices were raised by an employee last August, even as some Enron executives were talking up the stock while selling their own shares, reports CBS News Correspondent Sharyl Attkisson.

According to documents subpoenaed by Congress, an employee wrote to CEO Kenneth Lay, "it sure looks to the layman on the street that we are hiding losses."

"I am incredibly nervous that we will implode in a wave of accounting scandals," said the employee.

Congress will look at the actions of both Enron and its accounting firm in the fall of the energy trading giant.

"False accounting appears to be a very major problem and it appears that both Enron and the accounting firm were involved in this matter," House Energy Committee member John Dingell, D-Mich., said Monday on CBS News' Early Show.


Click here to learn more about
the fall of energy giant Enron.


Sen. Joseph Lieberman, D-Conn., chairman of the Senate committee that will investigate the Enron collapse, said he was troubled that a lawyer at Arthur Andersen & Co., Enron's accounting firm directed the destruction of Enron documents. The memo from an Andersen lawyer was uncovered by congressional investigators and first reported by Time magazine.

The memo from a lawyer was dated Oct. 12, 2001, when Andersen and executives of the energy giant "knew that Enron was in real trouble and the roof was about to collapse on them," Lieberman said.

"There's pretty strong evidence of insider trading, there's clear evidence of failure to file honest and correct reports," Dingell said.

Enron employees whose 401(k) accounts were filled with company stock watchd helplessly as ceaseless bad news obliterated their value last fall, while a bookkeeping mechanism barred them from cashing out.

"I'll never trust my employer quite the same again," said Tim Dalton, a corporate security specialist who was among the 4,500 Houston workers laid off in December.

Dalton has funneled some of his energies into a Web site, http://www.thecrookede.com, where he sells Enron-bashing T-shirts. Some of the proceeds go to a fund he's established to help fellow Enron retirees.

"We told someone we hope to sell some T-shirts for four to five months until it dies down," Dalton said. "'Die down?' they said, 'You'll be selling T-shirts all year as all the dishonesty and crookedness is exposed.'"


Politics: The Enron
spin cycle


Sen. Carl Levin, D-Mich., chairman of the Governmental Affairs investigations subcommittee, said his panel has issued 51 subpoenas and plans to focus on the "deceptive practices" of Enron, and the failure of its auditors to raise flags about the energy company's business practices and of its directors as corporate watchdog.

Enron says its stock price, which stood at about $80 a year ago, already was down to $13.88 when a coincidental 10-day freeze on 401(k) transactions was implemented because the plan changed administrators. By the time transactions could resume, the price was $9.98. It now sells for about 68 cents.

"What so hurts about the whole deal is that something you devote your whole life to, you see it destroyed right in front of your eyes," Prestwood said from his home on a quiet wooded country lot 40 miles north of Houston.

Enron filed for bankruptcy on Dec. 2.

Meanwhile, two top Cabinet officers who were contacted by Enron chief executive Kenneth Lay last fall as the company was struggling to keep its credit rating from falling said they never viewed the matter seriously enough to discuss it with President Bush.

Commerce Secretary Dan Evans said that in a telephone call on Oct. 29, Lay "reached out to me" in search of ways the government might help Enron head off a possible downgrading of its credit rating. The next day Enron's credit rating, in fact, was downgraded.

Treasury Secretary Paul O'Neill also said Lay called him about the same time, on Oct. 28, but "asked for nothing." He said Lay gave him a "heads up" that Enron was being scrutinized by ratings agencies and that his company's situation was similar to one that had faced another company in which the Federal Reserve took action to help.

"I think it's too early to say whether Bush has had any fault in this matter or not," said Dingell Monday, "but it's very clear that if he doesn't move forward vigorously with a strong and vigorous investigation and strong support for investigations by the SEC, the Department of Justice and other federal agencies responsible in this matter, it will very quickly become his Whitewateand he will have major fault in the matter."

Since 1990, Enron and its employees contributed $5.77 million to political campaigns, about three-fourths of it to Republican candidates. About half of the money was spent in the 2000 election, with Bush a major beneficiary.

©MMII CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report