Return to Transcripts main page
American Morning
Enron Execs Got Huge Bonuses Before Collapse
Aired February 11, 2002 - 08:25 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.
JACK CAFFERTY, CNN ANCHOR: On now to the Enron case, reports that hundreds of Enron executives got big bonuses just before the company collapsed. Now those reports aren't sitting well with the company's laid-off workers, as you might expect.
CNN's Ed Lavandera tells us now more than $50 million was divvied up as Enron went down.
(BEGIN VIDEOTAPE)
ED LAVANDERA, CNN CORRESPONDENT: 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 McMahon and Broadband Division Executive James Fallon each pocketed 1.5 million. John Lavorato and Louise Kitchen were awarded five 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.
REP. HENRY WAXMAN, (D), CALIFORNIA: We've also heard that some of those who had received such payments did not remain at Enron.
LAVANDERA: Many former Enron workers also questioned the timing of these payments. At least two former executives tell CNN many on the list worked for 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.
JEFFREY MCMAHON, ENRON PRESIDENT: The notion behind the retention payments Congressman was one that if we were to go into bankruptcy, that these key individuals would remain within the company to protect the businesses and assets value for the... LAVANDERA: 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 Lavandera, CNN, Dallas.
(END VIDEOTAPE)
CAFFERTY: Of course that report coming in the wake of many of the Enron executives appearing in front of Congress, congressional committees last week. Many of them invoking the Fifth Amendment. However, the former CEO of the company, Jeffrey Skilling, chose to sit there and take the questions and as best he could answer them. He didn't do much in the way of answering except to say I don't remember; I don't recall; I don't think that happened; Ya da, ya da, ya da.
Let me read you something in "Newsweek" magazine. This is a quote concerning Mr. Skilling's role in Enron. "When you are the CEO and you serve on the Board of Directors, you're supposed to know what's going on with the rest of the company. You can't get off the hook with me there. He's going to beat this the best way he can".
You know who said that -- Jeffrey Skilling's mother. The stock market began to try to shake off the Enron story on Friday. The question is can investors keep the ball rolling for second session. The answer lies with Amanda Lang and the stars. Let's start with Amanda and if she doesn't help us, we'll go to the stars later. Good morning. Do you believe that -- Jeffrey Skilling's mom saying, he should have known.
AMANDA LANG, CNN FINANCIAL NEWS CORRESPONDENT: Is she being quoted out of context there?
CAFFERTY: No this is an interview with "Newsweek" Magazine. She's 77 years old, and they got Betty Skilling and she just said flat out, you know, if you're running the joint, run the joint and know what's going on.
LANG: That reporter deserves a raise, whoever got that quote, I'll tell you that Jack.
(CROSSTALK)
CAFFERTY: That's pretty good stuff.
LANG: I'm going to call my mother after I get off the air and tell her never to talk to the press.
CAFFERTY: Yes, about -- do you have anything to hide Amanda? Let's talk about this for a minute.
(CROSSTALK)
CAFFERTY: Last week we were talking about ... LANG: No, you know you can be quoted out of context.
(CROSSTALK)
LANG: And we were talking last week about the ...
CAFFERTY: ... the fact that you may have snuck into the country illegally.
LANG: That's right -- that's right. Over that Ontario-Vermont border that apparently shows up on ...
CAFFERTY: Leaks like a sieve, that border.
LANG: It does.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
