Thursday, February 07, 2002

Enron was 'fun' - while it lasted

Local woman who worked there lost job, bonuses

By Cliff Peale
The Cincinnati Enquirer

        When Laurie Malone of Miami Township got a call from a headhunter in mid-1999 about a job in Houston, her first question was, “Who is Enron?”

        Two and a half years later, Ms. Malone and almost everyone else in America knows the fall of Enron Corp. as the biggest corporate bankruptcy in U.S. history.

        Ms. Malone, who had worked here at Fifth Third Bancorp and GE Capital, took the job at Enron's Energy Services unit.

        She sold power contracts worth up to $100 million a year to big retailers such as Home Depot and Saks.

        “I had no idea about Enron” when the recruiter called, she said this week in the kitchen of her suburban home.

        “But you walked in the door, and you could feel the energy. It was fun. It was hard-driving. ...

        “This was not for the faint of heart.”

        For her five deals closed in 2001, Ms. Malone was due a bonus of $484,000 at the end of January, she said.

        And she had signed a contract that would have paid her $150,000 in 2002.

        But she was laid off with 4,000 other Enron employees on Dec. 3, hearing the news after returning a message on her pager.

        The money she had hoped would secure her two sons' college education and her family's future is gone.

        “I don't think I'll ever see a dime of it,” she said.

        She is a Tristate link to the scandal that has pulverized the nation's seventh-largest company and widened to engulf political powers in Washington and financial powers such as auditor Arthur Andersen.

        While she has not lost her retirement savings like the other Enron shareholders who took the brunt of the stock's collapse last year, Ms. Malone is one of thousands who have submitted a bankruptcy claim.

        Including salary lost from her contract into 2003, bonuses and other benefits, Ms. Malone's claim totals $736,934.66.

        “From Dec. 4 on, I've talked to my colleagues every morning, and it's like you're getting punched in the stomach,” she said. “I can't even conceive of what I'm reading.”

        The story, leading newspaper front pages and television newscasts for months, reads like a novel: Enron set up partnerships to keep debt off its balance sheet and inflate earnings.

        When Enron was forced to restate its earnings, its stock price plummeted to less than $1 a share. The company filed for Chapter 11 bankruptcy protection Dec. 2.

        The next day, it laid off 4,000 workers. Ms. Malone was at her home office and received an urgent page to call Houston.

        “My administrative assistant told me, "We've all been laid off, and we have 30 minutes to leave the building. I'm grabbing your pictures off your desk,'” she recalled. “Later, my boss called me and told me.”

        Before the trouble became public, Ms. Malone's bonus was delayed from its scheduled payment last July.

        Her bosses told her the incentive plan was being standardized across the corporation and that she would get the money in January, she said.

        Ms. Malone received all of the encouraging e-mails from Enron executives, including former chairman and chief executive officer Kenneth Lay. She said she first suspected trouble when former CEO Jeff Skilling resigned in August.

        “As all of this stuff happened, the constant mantra was, "Don't get distracted by outside events. We have quarters to deal with,'” she said.

        “But we're not idiots. People started to get it.”

        After a planned white-knight merger with Dynegy Inc. emerged in early November, workers at Enron were relieved, she said. But that deal collapsed quickly, as Dynegy pulled out just after Thanksgiving, sealing Enron's descent into bankruptcy.

        Ms. Malone has started consulting with some large companies, helping negotiate energy contracts.

        It's the same role she played at Enron Energy Services. A skeletal unit of about half a dozen people remains of what once was a sales force of several hundred people, she said.

        They allowed large companies such as Home Depot to fix their energy costs for all their U.S. buildings. Enron would shoulder the risk and would minimize it with pure volume, administering hundreds of contracts at once.

        Ms. Malone still is puzzled by the huge risks taken at Enron's highest levels. That contrasts with her experience at Enron Energy Services.

        “We felt we were under rigorous hurdles, very tough standards, on what risk we would assume,” she said. “It was not a free-for-all environment. That's why this stuff just blows my mind.”


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