Enron e-mails reveal “callous disregard” for employees

The collapse of the Texan energy trader has ignited a number of lawsuits. In November, the Gottesdiener Law Firm in Washington DC brought a class action in federal court in Houston. Yesterday, it released copies of e-mails which it says show the company's "callous disregard" for its employees.

According to senior partner Eli Gottesdiener, many of Enron's employees were in the midst of losing their life savings and their jobs during a "lockdown," which prevented them from selling their shares of Enron stock between 26th October, 2001 and 13th November, 2001, while the company spiralled into bankruptcy.

According to Enron, the lockdown was administratively necessary for the company to proceed with a desired change of the pension plan's trustee and record keeper. However, the suit filed by Gottesdiener on behalf some 15,000 current and former Enron employees disputes that any lockdown was necessary to change service providers. Gottesdiener further alleges that, even if necessary, it should have been postponed to allow employees, who had more than 60% of their account savings in Enron stock, to sell their stock and salvage some of their investment.

The just-released e-mails, according to Gottesdiener, reveal two fundamental problems with the way company executives handled the lockdown. First, Gottesdiener said, the e-mails show that the company "arrogantly dismissed the concerns of employees who had been imploring them to delay the lockdown." Second, Gottesdiener said, they also show that the company issued false information about the lockdown, leading many workers to believe that the lockdown began a week earlier than it did and causing them to miss the opportunity to sell their stock when it was still selling for around $30 a share. According to Gottesdiener, by the time the lockdown was finally lifted, on 13th November, 2001, the price of Enron stock had plummeted to under $10 a share.

The first e-mail was issued the night of 25th October, 2001, just before the imposition of the lockdown the next day. Gottesdiener explained that the company issued the e-mail because it had been besieged by workers who were begging the company to postpone the lockdown to allow them to sell their shares. The e-mail twice acknowledged workers' complaints, saying: "We understand that you are concerned about the timing" of the lockdown and "We understand your concerns." But, the company said, it was going ahead with the lockdown as planned anyway for its own administrative convenience, saying, "We have been working with Hewitt (the new recordkeeper) and Northern Trust (the old record keeper) since July."

According to Gottesdiener:

"In translation, this says: 'We know that many of you have all of your savings in company stock and want to sell it to salvage what you can, but we simply can't be bothered - we've been working on this transition since July and it would be too much trouble to postpone it.'"

The second e-mail was issued on 27th September, 2001 and was the company's initial announcement to employees about the lockdown. The problem here, according to Gottesdiener, was that the information contained in the e-mail was "simply false." The e-mail told employees that the lockdown - which Enron euphemistically termed a "transition" - would begin on 19th October, and not 26th October.

"To ensure that records and individual accounts are converted accurately," the e-mail said, "a transition period of approximately one-month will begin Oct. 19." "During the transition period," the e-mail continued," participants "are not able to transfer funds among investment options" or "request a withdrawal." According to Gottesdiener, that last statement was false:

"In fact, workers could have sold their Enron stock between 19th October and 26th October. During just that week, right after the company issued its dramatic 3rd Quarter statement and the SEC opened its investigation, the stock lost half of its value."

Gottesdiener said that many workers did not sell during that week based on the company's statement that they could not do so. "Where were Ken Lay and other top Company officials all while this was going on? The answer seems to be: On the phone to the Bush administration asking for a bailout," Gottesdiener said.

Gottesdiener's reference was to the fact that while the Company was refusing workers' calls to postpone the lockdown, Enron's Chairman, Kenneth L. Lay, and other top officials, who personally made tens of millions of dollars from selling off their Enron stock, were telling Bush administration officials that without some form of government assistance, Enron was looking at bankruptcy.

"Enron's arrogance in refusing to delay the lockdown, knowing what it knew, is simply stunning. From the beginning to the end of the lockdown, 26th October - 13th November, the stock lost another third of its value," Gottesdiener explained. "We are obviously pursuing all this in court but the pension laws have to be strengthened to prevent this type of victimisation of workers in the future."

The first and second e-mails can be viewed at www.enronsuit.com/email1.html and http://www.enronsuit.com/email2.html respectively.

Meanwhile, computer experts have been recruited to recover missing Enron documents, thousands which were deleted or destroyed by Andersen. Investigators are hoping that deleted e-mails and documents will be recovered from the Andersen computer systems to reveal who knew about the problems at Enron before its collapse. Andersen has fired the lead partner responsible for Enron's audits. Three other partners have been placed on leave.