Former Enron employees will now get the remainder of lawsuit settlement payments that had been delayed for a long time because of a dispute. The Department of Labor announced recently that The Enron Creditors Recovery Corp. and the Illinois-based human resources company Hewitt Associates will restore $11.2 million to the settlement fund. As has been reported, Hewitt had made a serious error in the first wave of payments in 2006. The settlement resolves a contempt motion filed against Hewitt for having misallocated the 2006 disbursement and refusing to make up the difference. The settlement will ensure that all pension plan participants will receive all the funds to which they are entitled. U.S. District Judge Melinda Harmon is overseeing the settlement and fund disbursement.
The lawsuit in question was filed on behalf of employees who were in Enron retirement plans when the energy company collapsed in 2001. The entire case was settled for $218 million. In 2006, Hewitt erred when it made the first wave of payments. In a disbursement of $89 million, it misallocated $22 million in payments — overpaying 7,700 ex-employees and underpaying 12,600.
The problem could have been resolved in part by altering the second set of payments, but that would have left the settlement fund with a $9 million shortfall. The $11.2 million settlement includes interest on that money. The rest of the $218 million remained in limbo until the $11.2 million was restored. Hewitt took the position that, because it was hired by Enron, Enron was ultimately responsible for Hewitt’s errors. That really made no sense and was impossible to justify. The good thing now is that $11.2 million in lost funds and interest will finally be restored and paid. However, it seems that Hewitt should be penalized for its failure to act sooner and for the indefensible position it took in the matter.
Source: Houston Chronicle
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