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CNN Live Saturday

Enron Execs Make Millions Before Bankruptcy

Aired February 09, 2002 - 22:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLAWAY, CNN ANCHOR: Well, there is a new revelation tonight on how some Enron executives made big profits, some in the millions from the company just before it filed for bankruptcy. And CNN's Ed Lavendera has more tonight on the so-called retention bonuses and who cashed in.

(BEGIN VIDEOTAPE)

ED LAVENDERA, CNN CORRESPONDENT (voice-over): When Enron workers packed up and moved out last December, most of their bank accounts were drying up. But at the same time, CNN has learned some employees were making lucrative deposits in their own accounts.

CNN has obtained the list of retention bonuses, paid to Enron workers just a few days before the company filed for bankruptcy protection. About 500 people were paid altogether more than $55 million. Many were awarded hundreds of thousands of dollars to see the company through its reorganization process.

Recently appointed president Jeffrey MacMahon and broadband division executive James Fallon each pocketed $1.5 million. John Leverato (ph) and Louis Kitchen were awarded $5 million and $2 million. They were prominent traders at Enron, but now work for UBS Warburg, which purchased Enron's highly profitable trading company.

Several executives on the list left Enron several weeks after receiving the bonus. Congressional investigators are also paying closer attention to what motivated these bonuses.

UNIDENTIFIED MALE: We also heard that some of those who'd received such payments did not remain at Enron.

LAVENDERA: Many former Enron workers also questioned the timing of these payments. At least two former executives tell CNN many on the list worked on the infamous partnerships that led to Enron's collapse. One former executive described the payouts as hush money. But even Enron executives who sounded warnings about the partnerships defend the bonus payments.

UNIDENTIFIED MALE: The notion behind the retention payments, congressman, was one that if we were to go into bankruptcy, is that these key individuals would remain within the company to protect the businesses and assets value for the credit... LAVENDERA (on camera): According to finance laws, money spent 90 days before a company declares bankruptcy could be recovered by creditors. Those include Enron investors and especially former workers who got stiffed on severance packages. They're trying to get their hands on as much of that $55 million as possible.

Ed Lavendera, CNN, Dallas.

(END VIDEOTAPE)

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