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Friday, Jul 10, 2009
How employees of the energy trader got sucked into stock market euphoria -- and catastrophe.
Jan 23, 2002 | Janice Farmer is afraid of her electric bill, so at night she sits in the dark. Retirement wasn't supposed to be like this; this wasn't what Enron, America's genius energy supplier, had promised.
Farmer once had $700,000 in her 401K -- her life savings, all in Enron stock, built up over 16 years with what had been the seventh largest company in the United States, a company touted by the press, the execs, the Wall Street analysts as the future of American business. The money's gone; what remains is sorrow and astonishment.
"I was proud to invest in Enron stock," Farmer told a Senate committee last December, one of seven now investigating the Enron collapse. "We were a loyal and hardworking group of employees. We lived, ate, slept and breathed Enron because we were owners of the company. I trusted the management of Enron with my life savings.
"Senators, I won't mince words here," Farmer told the chamber. "They betrayed that trust."
Tens of thousands of Enron employees and retirees together lost as much as $1.3 billion, and probably a lot more, in what appears to be a monumental case of cooked books, lying and corporate corruption. Some say they'll be forced to sell family land, or homes, or take their children out of good schools they can no longer afford. Some are so depressed they're now on medication. Some who put everything into Enron stock -- ignoring the basic principle of diversity in 401K investing -- damn themselves for being so easily seduced.
The hardest hit are the retirees, like Farmer, who worked in the natural gas "right-of-way" office managing pipeline systems. Or Charles Prestwood, who spent 33 years in the gas industry, the last 15 with Enron, working the pipelines themselves. His 13,500 shares were worth about $1.3 million at peak. When I spoke with him, Enron was trading at 67 cents, down spectacularly from a 52-week high of $83. In a few days, the stock would be delisted.
Prestwood lives on a three-acre farm in Conroe, Texas, 60 miles north of Houston; he has two horses and a feed barn. He survives on a pension from a previous employer -- about $521 a month after health insurance and income tax -- and a social security check of $1,294. "I'm not gonna be able to last long like that," he says. "I got some land that I wanted to give to my kids. That land was given to me by my mother. My mother died when I was born. I can go in the cemetery and look upon her tombstone, that's the day I was born, September the 15th, 1938. That land was the only thing other than the family Bible that she left me. My daddy and her, they had an agreement: If something happened to her and her baby lived, she wanted her portion of the property to go to the baby, and my daddy right there said, 'If something happens to you, I'll give the baby my part too.' And my daddy did, in November of 1938, he deeded that eight acres. I've got to sell that land now. That'll take care of a few more of them house notes.
"There ain't no such thing as a dream anymore," Prestwood says. "I hadn't planned much for the retirement. Wanted to go fishing, hunting. I was gonna travel a little."
