US - The US Department of Labor has asked the Federal District Court in Texas to hold Hewitt Associates in civil contempt, claiming it wrongly dispursed settlement funds to Enron employees, causing a US$9.15m shortfall in funds.
The Department of Labor said Hewitt caused the settlement fund to have insufficient cash to pay Enron workers, retirees and beneficiaries all amounts due them. The fund holds recoveries obtained by the department and class-action plaintiffs in related lawsuits regarding Enron's pension plans.
Even with other corrective action being undertaken by parties to fix the alleged misallocation, there would be a $9.15m shortfall in the settlement fund as a result of Hewitt's noncompliance with the court-approved allocation formula, the Department of Labor said. Hewitt served as the administrator for the settlement fund.
Elaine Chao, US secretary of Labor, said: "With this legal action we are seeking to ensure that the pension plan participants receive all the funds they are entitled to."
The Department of Labor claimed, because Hewitt did not perform the allocation correctly, some participants received too much in settlement proceeds at the expense of the remaining participants, amounting to $22m being overpaid.
It said the settlement fund now has insufficient funds to pay the correct amounts to participants who were underpaid.
Hewitt said it was reviewing the claims in the Department of Labor's motion and preparing a full response for the court.
A spokesperson said: "Hewitt has been working closely with both Enron and the Department of Labor since the error in this first distribution from the settlement trust was discovered.
"We are surprised that the Department of Labor is pursuing this action against Hewitt since Enron is, in fact, the defendant in this order. Our primary goal has always been to find a solution that is in the best interest of the plan participants and this continued legal action is likely to further slow down that process. "
The proposed motion for civil contempt must be approved by the US District Court for the Southern District of Texas.
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