Enron hits state pension fund

By Lynda Arakawa
and Kevin Dayton
Advertiser Capitol Bureau

The state Employees' Retirement System lost $11.3 million from its investment with Enron Corp., which collapsed in December in the biggest bankruptcy filing in U.S. history.

Employees' Retirement System administrator David Shimabukuro yesterday said the loses were in Enron stocks and bonds. The pension fund for 93,000 active and retired state and county employees was estimated at $8.4 billion at the end of last year.

Enron, once the nation's seventh-largest company, filed for bankruptcy Dec. 2, depleting the savings of workers and stockholders.

Shimabukuro said there are a number of pension funds that have lost hundreds of millions of dollars and are considering a class-action lawsuit against Enron.

"We are consulting with the attorney general's office to consider what is the appropriate course of action," including whether the state should pursue allegations of fraud or misconduct by Enron corporate executives, Shimabukuro said.

"This was a blue-chip stock," he said, meaning it was widely regarded as a safe investment.

Shimabukuro said the courts will generally designate the fund with the largest stake to be the lead plaintiff. If a settlement is reached, those represented in the class action would share in the settlement.

The fund has diminished in the past year and a half, largely because it paid out more in benefits than it traditionally has, and because it lost money in the volatile stock market. The fund was $9.9 billion in June 2000, and fell to $8.8 billion in June 2001.