Local 125 members testify at congressional probe of Enron fiasco

Three members of Portland-based Electrical Workers Local 125 testified this week in Washington, D.C.,before a congressional hearing investigating the collapse of Enron.

Bob Vigil, an employee at Enron subsidiary Portland General Electric, and PGE retiree Don Eri told the House Financial Services Subcommittees on Capital Markets and Oversight how the bankruptcy of Enron - one of the biggest corporate collapses in history - has affected them and co-workers at PGE. Joining them was Local 125 Business Manager Bill Miller.

The exact content of their testimony was not known prior to this issue going to press.

On Dec. 12, representatives of the national AFL-CIO proposed new regulatory reforms, litigation, investment manager and capital market initiatives aimed at protecting worker savings in 401(k) and pension plans from the myriad of conflicts of interest that led to Enron's collapse.

"Tens of billions of dollars in worker capital was destroyed by the conflicts of interest that led to the Enron debacle," explained AFL-CIO Secretary-Treasurer Richard Trumka. "The collapse of Enron bears directly on the security of participant-directed retirement plans such as those urged by Social Security privatization advocates," he added.

AFL-CIO affiliate union-sponsored benefit funds have over $400 billion in assets and hold an estimated 3.1 million Enron shares.

Trumka outlined a series of measures the labor movement and worker funds are undertaking:

* Submission of two rulemaking petitions to the Securities and Exchange Commission (SEC) to tighten the definition of who is an independent director, and to reduce conflicts of interest that may harm the objectivity of public auditors;

* Accountability meetings to review the performance of investment managers such as Alliance Capital, which made large investments in Enron stock for their worker pension fund clients;

* Filing of class-action lawsuits against Enron's board of directors and executives by pension funds and 401(k) participants to attempt to recover their losses;

* Opposing legislation currently under consideration that would remove the ban on conflicts of interest in the provision of investment advice to 401(k) participants; and

* Filing shareholder proposals on auditor independence, and on analyst independence at financial services companies.

"The Enron debacle shows the need to address the conflicts of interests that are hurting working families in the capital markets," said Trumka. "Conflicts of interest permeated every level of the Enron fiasco."

December 21, 2001 issue

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