Enron and Texas and Florida Pensions

January 18, 2002

Dear friends at BuzzFlash,

I am very interested in your article on "Florida, Enron, and Alliance Capital." I am very interested in getting an investigation in Texas on Enron and the loss of Texas pension funds in the amount of $60 million.

I am a contributing member of Texas Teacher Retirement, with 23 years in it now. So I was naturally concerned when Teacher Retirement (TRS) lost 36 million in Enron and (Texas) Employee Retirement System and Permanent University Fund also lost millions. What is so suspicious is that TRS bought Enron stock three times after word came out that Enron was in trouble.

I refer you to the Austin American Statesman newspaper of Dec. 26, 2001, front page story. I don't have a link for it other than the archives title:

Article available in the Austin American Statesman archives
(requires a paid registration)

I am seeing a suspicious pattern here in the Bush states of Texas and Florida--were state pension funds used to try to prop up a failing company which funneled millions to the top officeholders of these states? Was someone told or pressured to shore up Enron?

I have written up my questions as a member of TRS in a piece which I have sent to my state reps, my Dem. congressman, the heads of the two teacher unions which I have ties to, and I have sent it to the Austin American Statesman and Corpus Christi Caller Times to see if they might print it as an op-ed piece which is not likely. I am hoping for a state investigation by an outside prosecutor.

Thanks for your good work.

Jan Weaver

Here is what I wrote:

Investigate millions lost to Enron by Texas pension funds

The loss of $35.7 million by Texas Teacher Retirement System in the collapse of Enron affects more than current and retired teachers and staff. Money lost from state pension funds comes from public school employees, college employees, and ultimately from all Texas taxpayers because state funds match employee contributions. Texas taxpayer monies flowed into Enron in the last months as Enron awarded huge bonuses to top officials just before declaring bankruptcy. Of all the Texas agencies, TRS had the largest loss.

A state-level investigation of Enron's dealings with Teacher Retirement System is needed, particularly of the decision by TRS to invest in Enron after the news was public that the company was in trouble. An outside prosecutor is required because the top state officeholders received large campaign contributions from Enron.

According to the Austin-American Statesman December 26, 2001 article, Enron announced $600 million losses on October 16, 2001, and Enron publicly acknowledged a Securities and Exchange Commission inquiry October 22. The very next day on October 23, TRS bought $2.2 million worth of Enron stock. October 24 the other state retirement system Employee Retirement System bought $10 million worth of stock. It is very curious that two state agencies would buy stock the two days immediately after bad news on Enron appeared.

On October 31, SEC announced a formal investigation into Enron. On November 6, Enron stock dropped, and on November 8, Enron increased its debt by $2.5 billion. Despite this very bad news, on November 9, TRS bought $4.3 million of Enron stock, and on November 12, TRS bought $4.7 million more.

Is it possible that Texas retirement funds were being used in an attempt to shore up a failing Texas company which had donated heavily to state officeholders charged with overseeing Enron? Why did TRS buy risky stock three times after it was known that Enron was in serious trouble? The people of Texas have a right to know.

Additionally, new laws may be needed forbidding TRS and ERS to invest in troubled companies. State pension plans should not be making risky stock acquisitions.

40% of Texas teachers may retire in the next 5 years. The TRS losses this year from Enron may cause a drop in benefits in the future no matter what anyone says today. Large budget deficits are coming to the state of Texas because of recent tax cuts. There may not be state monies available when the system is under stress with large numbers of teachers retiring to make up for the lost Enron money.

State officials should have been doing their jobs in the first place by enforcing the laws and not letting such a giant rip-off of state funds occur. Unfortunately, too many of our state officials were in charge of overseeing the very company that helped put them in office in the first place.

According to Lobby Watch at website www.tpj.org/Lobby_Watch/enron.html, Gov. Rick Perry, Attorney General John Cornyn, State Comptroller Carole Keeton Rylander, and members of the Texas Supreme Court received sizeable contributions from Enron. Obviously, this creates a conflict of interest for these officials to investigate the company which gave them campaign money.

The combined loss of $60 million from the two largest Texas pensions to Enron is one of the most outrageous scandals in this state in decades. A state-level independent investigation is needed into Enron and its dealings with Teacher Retirement and Employee Retirement Systems, particularly focusing on the decisions and policies of the Teacher Retirement System which allowed it to invest three times in Enron after learning that the company was in danger of bankruptcy.

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Contributed by Jan Weaver