Enron Executives May Have to pay.(BUSINESS)
Byline: Tom Ramstack, THE WASHINGTON TIMES
Attorneys for the California lieutenant governor plan to file court documents soon that could cause Enron Corp.'s directors to forfeit the multimillion-dollar bonuses they paid each other shortly before declaring bankruptcy and force them to pay damages out of their personal assets.
The legal maneuver is a rare phenomenon in civil cases that courts normally reserve for when there is evidence of criminal conduct by a corporation's top executives.
"The liability for the conduct flows directly to the individuals that engaged in it," said Michael Aguirre, attorney for California Lt. Gov. Cruz Bustamante. "If corporate officers were aware of these practices, then they become personally liable for the wrongdoing."
The bank accounts and other financial assets of the corporate directors could be frozen by the courts after the "prejudgment motion" that Mr. Aguirre and other attorneys are preparing.
Depending on the outcome of the litigation, the money and, perhaps other property, could be seized to pay Enron's debts and liabilities.
"Individuals that act illegally implicate the corporation but they also implicate themselves," Mr. Aguirre said.
He referred to both the "retention bonuses" paid to Enron's directors and to new evidence this week that the company joined other energy companies in manipulating West Coast energy prices to increase their profits.
The Enron documents released Monday night described how the energy trading company sought to cash in on California's energy crisis in 2000 and 2001. During the crisis, wholesale energy prices shot up tenfold. California is seeking $9 billion in overcharges for electricity.
The Senate Energy and Commerce Committee plans to meet next week to investigate the charges. Members of the California congressional delegation held a press conference yesterday to condemn Enron and other energy companies they accuse of extracting large profits from consumers concerned about an energy shortage. They also called for a criminal investigation.
The evidence of market manipulation came from documents Enron's new management turned over to federal and state investigators this week. The documents show Enron consciously created congestion on power lines to cause shortages and transferred electricity out of state to avoid price controls. They then profited from the higher prices consumers were forced to pay because of the apparent shortage.
They also gave names to their manipulative strategies, such as "Death Star," "Fat Boy," and "Get Shorty," according to the documents. …