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The U.S. Department of Labor announced on November 16, a settlement agreement with former Enron executive Jeffrey K. Skilling resolving the department's action against him. Under the agreement, Skilling will drop his opposition to a previous $85 million settlement, waive his right to benefits from Enron's pension plans and be permanently barred from serving in a fiduciary capacity to any employee benefit plan governed by the Employee Retirement Income Security Act (ERISA) in the future.
This proposed settlement must be formally documented and submitted for approval to the U.S. District Court for the Southern District of Texas.
The settlement acknowledges that Skilling is already subject to an order of forfeiture obtained by the U.S. Department of Justice's Enron Task Force. That order, entered October 23, 2006 in U.S. District Court for the Southern District of Texas, requires the establishment of a $45 million restitution fund for victims of Enron-related fraud, including plan participants and securities investors. The Labor Department's settlement provides that, if Skilling's convictions are overturned or vacated and the restitution fund is dissolved, Skilling will still pay $2.5 million to the participants and beneficiaries in the company's savings and employee stock ownership plans plus $500,000 in penalties to the department.
On June 26, 2003, the Labor Department sued Skilling and others for mismanagement of the plans in violation of ERISA. The department alleged that Skilling failed to properly oversee the fiduciaries appointed to run Enron's plans and failed to correct misstatements about Enron's financial condition made by Kenneth Lay to plan participants. Skilling also was sued as a member of Enron's board of directors for failing to properly appoint and monitor a trustee to oversee the employee stock ownership plan.
In previous settlements obtained by the Labor Department and private plaintiffs, more than $220.8 million has been recovered for the pension plans from Enron, its directors, officers and fiduciaries who served on the plans' administrative committee. The department and private plaintiffs also obtained a $12 million claim against Lay's estate, although the final recovery will depend on the total amount of assets available for distribution from the estate. These recoveries are subject to the resolution of certain appeals as well as attorneys' fees and expenses, and they do not include any recovery obtained from Skilling.
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