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A few questions for an Enron employee
By Lawrence Henry
It's one of the oldest wheezes in Congressional legerdemain. Bring a woman before a committee and have her cry. The Senate Government Affairs Committee did it last Tuesday with one Deborah Perrotta, identified as a 59-year-old "mother of two" and "senior administrative assistant" (means "secretary") with Enron Corporation. Ms. Perrotta, who worked at Enron for five years, testified that she "lost" her 401(k) when Enron declared bankruptcy, that "My losses were $40,000" - an amount Ms. Perrotta had planned to spend on her daughter's wedding.
No Senator - at least so far as reported by the Associated Press, National Public Radio, USA Today, The New York Post, or Reuters - thought to ask the weeping lady any of several obvious questions.
So I will.
Ms. Perrotta, you are 59 years old, and you worked for Enron for five years.
Did you have jobs before your job with Enron? Did those jobs offer pension benefits? Do you have any pension assets accumulated from what appears to be a 30-year working life before your five-year stint with Enron?
Other than your Enron 401(k), do you have any self-directed pension plans of any kind -- IRAs, SEP-IRAs, other 401(k)s, Roth IRAs, or annuities? If you do have these kinds of pension plans, how have you invested them? Have you ever before invested all of your pension funds in the stock of a single company? If yes, which company, and what happened?
If you have other pension assets, as mentioned above, what are those assets worth today?
Did you buy Enron stock with your own portion of your 401(k) funds? Over on the House side, Ms. Perrotta, the Congressional Research Service has reported that 89 percent of Enron stock owned by Enron employees was bought by those employees voluntarily - it was not the the company matching contribution to the 401(k). Were you one of those Enron employees, Ms. Perrotta? Did you buy nine out of 10 of your Enron shares voluntarily?
Taken all together - the stock you bought and the stock Enron gave you - what was the average cost basis of your Enron stock holdings?
When you say, Ms. Perrotta, that you "lost" $40,000, where does that number come from? At what point was your Enron 401(k) apparently worth $40,000?
What was your average income over your five-year term with Enron? How does that compare with the salaries of other senior administrative assistants at other companies in the Houston area? Did you ever get any raises? How much?
Did you ever get any bonuses? How much?
Did Enron ever fail to pay your salary?
Did you ever think that saving for a short-term goal, like a wedding or a new car, by putting money in stocks - especially in a single stock - might not be a very safe thing to do? Or did you figure only that you could save money tax-free, let the stock grow tax-free, and then take that money out - legally, and tax-free - when you were 59.5 years old to pay for your daughter's wedding?
There's nothing wrong with that, is there? No, of course not.
You're 59 years old, Ms. Perrotta. You obviously didn't need that money for your retirement.
Lawrence Henry is a senior writer for Enter Stage Right and not really a grouch.
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