Skilling, Government Reach Deal in Suit

The government and former Enron chief executive officer Jeffrey Skilling have entered into an agreement that would clear the way for a separate $85 million settlement to proceed, bar him from ever overseeing a company's employee benefit program and waive his right to pension benefits, the Labor Department announced recently.

Skilling was convicted in May of conspiracy and fraud and was sentenced last month to more than 24 years in prison for his role in the energy company's accounting scandals that came to symbolize corporate fraud in America. The company's collapse wiped out thousands of jobs and more than $2 billion in employee pension plans.

To go into effect, the proposed agreement must be approved by the U.S. District Court for the Southern District of Texas.

The Labor Department sued Skilling and others in 2003 for alleged mismanagement of Enron Corp.'s pension and benefit plans. The proposed settlement would resolve the department's civil action against him.

Under the proposed agreement, Skilling would drop his opposition to a separate $85 million settlement, dating back to 2004, between the Labor Department, Enron's outside board of directors and fiduciaries of its pension and benefit plans, department officials said. With Skilling's opposition removed, money from that settlement would be able to flow to workers once covered by those plans, officials said.

The department said Thursday's proposed settlement acknowledges that Skilling is already subject to an order, obtained by the Department of Justice's Enron Task Force, that requires the creation of a $45 million restitution fund for victims of Enron-related fraud.

Thursday's proposed settlement provides that if Skilling's convictions are overturned or vacated and the restitution fund is dissolved, Skilling would still have to pay $2.5 million to the participants and beneficiaries in Enron's savings and employee stock ownership plans, plus $500,000 in penalties to the department.

The proposed settlement would permanently bar Skilling from serving in the future in a fiduciary capacity to any employee benefit plan covered by the Employee Retirement Income Security Act, the 1974 law that governs the operation of most private pension and benefit plans.

Skilling's rights to benefits from Enron's pension plans also would be waived. The department did not give the value of those benefits.