The Labor Department proposed a $12 million agreement on Thursday with the estate of Kenneth Lay, the deceased founder of Enron Corp., to settle claims involving mismanagement of workers' pension plans.
The proposed settlement on behalf of participants covered by Enron's pension plans is subject to approval by the U.S. District Court for the Southern District of Texas, the department said.
Even if the settlement is approved, it is unclear whether all of the money would ultimately be collected.
"Although the proposed settlement provides a $12 million claim against the estate, the final recovery will depend upon the total amount of assets available for distribution from Lay's estate," the department said.
The money collected would flow to the participants in Enron's pension plans, said a Labor Department attorney.
Charles Prestwood, 67, a former pipeline operator who retired from Enron in 2000 and later lost $1.3 million in retirement savings, said he would have liked to have seen a bigger settlement. He also wondered whether he would actually get a slice of the money.
"I really hope I do see some of it," Prestwood said. "But it doesn't sound like much. I wish we would get more than $12 million."
Lay died of a heart attack in July. He faced the prospect of the rest of his life in prison after his conviction May 25 of fraud and conspiracy in one of the biggest financial debacles in American corporate history.
The Labor Department sued Lay and others in 2003 for mismanagement of Enron's pension plans. The department alleged Lay failed to properly oversee the fiduciaries he appointed to run Enron's pension plans.
The department also contended that Lay misrepresented Enron's financial condition to employees and plan officials by encouraging them to buy Enron stock when he knew it was imprudent to do so.
Lay also was sued as a member of Enron's board of directors for failing to properly appoint and monitor a trustee to oversee the employee stock ownership plan.
The department said Thursday's agreement does not settle the government's claims against Jeffrey Skilling, former CEO of Enron.
Like Lay, Skilling also was convicted of fraud and conspiracy for lying to employees and investors about Enron's financial health.
