Saturday, January 19, 2002

Ohio joins Enron suit to recover pension funds

By Robert Tanner
The Associated Press

        With the Enron collapse wiping out at least $1 billion from the retirement funds of teachers, firefighters and other public employees, Ohio is joining Georgia and Washington in a class-action lawsuit to win back some money from the once-giant energy trading company.

        Several other states are examining their ties to accounting firm Arthur Andersen, or weighing legal action against it. Florida has already filed subpoenas for a potential civil suit.

        “We owe it to these public servants to get back as much of their money as we possibly can,” Ohio Attorney General Betty Montgomery said.

        The retirement of individual public employees — and the funds' financial stability — are not in danger, according to the directors of retirement funds in several states. Losses in each state accounted for just a fraction of a percent of each retirement fund's value.

        Attorneys general in Georgia, Ohio and Washington state have asked a federal court in Texas to make them the lead plaintiffs in existing investors' securities fraud litigation. Others seeking to lead the class-action suit include agencies overseeing pension funds in Florida and New York City, and the university pension fund in California.

        The U.S. District Court in Houston has yet to decide who will lead the suit; briefs are to be filed next week, according to Russ Willard, a spokesman for Georgia Attorney General Thurbert Baker.

        Dozens of attorneys general have been discussing Houston-based Enron Corp. and state retirement funds in conference calls over the last month, according to officials in several attorneys general offices.

        Ms. Montgomery filed on behalf of the Ohio Public Employees Retirement System and the State Teachers Retirement System. Both systems had invested in Enron stock. As a result of the recent plummet in stock prices, the systems lost a combined $114.5 million.

        Other retirement fund losses included $300 million in Florida, $127 million in Georgia, and $35 million in Arizona.

        Rhode Island lost only $4.7 million, after wisely — or luckily — selling all its Enron stock in early August, said Treasurer Paul J. Tavares, the chairman of the state's retirement system.

        An Enron spokesman in Houston did not immediately return a call seeking comment on Friday.

        The lost money, like the $103 million gone in Washington state, needs to be seen in perspective, said James Parker, director of Washington's investment board, where the fund totals $54 billion.

        “When the stock market each day goes up and down a half-percent, the change is of the same magnitude,” he said. “When the market goes down, OK. But when it happens this way, you want to get it back.”

        Like Congress, officials in Texas, Florida and Connecticut are beginning investigations into Andersen's role in the downfall of Enron.

        Florida Attorney General Bob Butterworth has already issued civil investigative subpoenas to Andersen and Enron.

        The Texas Board of Public Accountancy has initiated an investigation into whether the firm violated state auditing standards.

        Connecticut Attorney General Richard Blumenthal is seeking a similar investigation, calling recent allegations against the firm “strikingly and surprisingly similar” to a probe into a 1990 real estate investment scam.

        In Connecticut, the accountancy board's investigation could lead to the suspension or revocation of the firm's permit to practice in the state.

        An Andersen spokesman at the firm's Chicago headquarters did not immediately return a call on Friday. The company said Thursday it retained Enron as a client, despite warnings of problems, because “it appeared that we had the appropriate people and processes in place to serve Enron and manage our engagement risks.”


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