Locals bear burden of Enron's demise
Several PGE employees in Jefferson County watched their retirement funds vanish as their Enron 401(k) plans plummetedNews Editor
Bob Vigil is experiencing his 15 minutes of fame.
But Vigil, an electrical machinist working foreman for the Pelton/Round Butte Hydroelectric Project, would rather have these 15 minutes come under different circumstances.
On Dec. 18, Vigil traveled to Washington, D.C., to testify in front of the U.S. Senate's Science and Commerce Committee regarding the Enron debacle. He has spent many days since fielding calls from newspapers and CNN.
The 47-year-old union worker for Portland General Electric recently watched roughly $200,000 in his Enron 401(k) fall to $16,000 in what seemed like the blink of an eye.
"I feel betrayed," says Vigil, a Madras resident who's been with PGE for 23 years. "I feel like we trusted Enron to provide a negotiable 401(k) package they would administer properly."
Now, Vigil says, the retirement he was planning in eight years will have to be postponed until he turns 65. "Unless I hit the lottery," he adds.
Vigil is not the only Jefferson County resident to bear a burden in the demise of the country's seventh largest corporation. Enron bought PGE in 1997 when the Portland-based utility company's stock was trading at $27 a share.
More than 30 area residents are employed by PGE in Jefferson County at the Pelton/Round Butte Hydroelectric project. About 25 of them have had their finances severely affected. They watched their 401(k) shares climb to nearly $90 after being converted to Enron stock five years ago then fall to the 55 cents each share was trading at Friday. Few are eager to talk about it.
"It is just something we've had to deal with," says Don Kraus, the Pelton/Round Butte Project Manager. He says he has lost a "substantial amount of money" but is reluctant to elaborate. He doesn't feel comfortable discussing his parent company's situation because of the ties he has to it as the top local administrator.
"If we hadn't been bought by Enron ..." Kraus says, then pauses.
"There were lots of PGE employees excited about Enron's growth that moved all their stock into Enron," he adds dryly.
Several Portland-area PGE employees have fallen on harder times. Stories have emerged of individuals rolling their entire portfolio into Enron stock and purchasing more with money from their paychecks. Some have lost $700,000; other Enron employees more than $1 million.
Rob Osborn, a specialist III with the Pelton/Round Butte Hydroelectric Project, is one of a handful of local Enron stockholders that cashed out much of his stock before it crashed to bellow a dollar.
At 59, Osborn was permitted to roll Enron shares into other stocks. Enron employees below the age of 50 are bound under their 401(k) plan to keep their money invested in the company.
When the stock slipped to $46, Osborn moved 700 shares out. His remaining 300 shares, worth $40,000 at their peak, are all but worthless now.
"It's a kick in the bucket compared to what happened to Bob and others," says Osborn, who was to retire on April 1. "There are four of us here in our late 50s that were planning to retire but now we're not going to."
As part of his negotiated contract, Vigil and other union members could contribute as much as 15 percent of their pay into the 401(k) plans with Enron matching up to 6 percent.
Enron executives began selling more than $1 billion they held in the company's stock last year before it tumbled.
No Enron stockholders, regardless of age, could sell between October and November 2001 during the company's demise when the stocks were locked down as Enron switched 401(k) fund managers.
"The fact that it coincided during the time the stock went down, well, you can speculate all you want," Kraus says.
Adds Vigil: "It seems awfully coincidental. It seemed awful damn curious but people under 50 couldn't sell anyway.
"The appearance right now is that there were definitely some shenanigans going on."
Now, with Enron having declared bankruptcy on Dec. 2, the future of these employees' parent company looks as dim as their 401(k)s.
But PGE has remained fairly stable through a strange, complicated marriage with Enron that is heavily regulated with safeguards from the state's public utilities commission. PGE employees' paychecks continue to roll in and their jobs remain secure. But they're going to have to keep working several years longer than they expected.
"The most important thing I want people to understand is that none of this is directed at Portland General Electric," Vigil says. "We hold nothing against PGE. Our grievances are with Enron."
The affected Jefferson County PGE employees have trouble making sense of what is now being called "Enrongate."
"It's hard to understand how a company with $60 billion worth of assets owes $38 billion," says Kraus, who still hopes he'll be able to find a way to retire by 55.
When Enron bought PGE, Osborn says the Houston-based company made the employees take an oath to be "loyal and honest."
The company, which has had unprecedented political clout in Washington thanks to, many believe, the millions it has contributed in campaign contributions to both Democrats and Republicans, concealed much of its debt through partnerships with subsidiaries it created. In the fallout of Enron's bankruptcy, it has been revealed that its consulting and auditing firm, Arthur Andersen, which shredded countless documents, knew of a possible demise of the company months before its stock crashed. Meanwhile, Enron CEO Kenneth Lay encouraged PGE employees to continue buying the stock after he cashed out millions.
"I'm not going to say I think they did anything illegal," says Vigil, "but I think they certainly did something unethical."
Says Osborn: "When financial analysts were saying it's so hard to figure out Enron's financial statements we thought all the best things. We thought that Enron was just trying to keep their good secrets but they were trying to keep secret their problems."
Despite seeing their retirement funds evaporate in a matter of months, these PGE employees say they have remained in good spirits.
"It went from, `Geez, how could this happen,' to being funny," Vigil says.
Kraus even says he holds out hope that Enron will rise from the ashes.
"I would hope that Enron could get through this thing and be a viable company again," says Kraus. "Because I'm not going to sell my shares at 55 cents. I'll watch them go to the toilet before I do that."
In light of their trammels, PGE employees of Jefferson County have many words of advice to offer 401(k) holders, but one resounding message echoed by these employees rings louder than the rest: