Raynor: Enron the People's Crooks, Not 'People's Cops'; AFL-CIO - UNITE Union Leader Says 'It Will Happen Again' Unless Changes Made

Business Wire, Feb 6, 2002

Business Editors/Congressional Writers

WASHINGTON--(BUSINESS WIRE)--Feb. 6, 2002

In testimony this morning before the Senate, Bruce Raynor, President of the Union of Needletrades, Industrial and Textile Employees (UNITE), called Enron executives who bilked retirees out of billions in life savings the "People's Crooks."

Raynor referred to a 1997 speech in which Ken Lay referred to Enron as "the people's cops."

"Ladies and gentleman, Ken Lay said Enron was 'the people's cops.' They weren't. They were the people's crooks. And unless we do something about it, it's going to happen again," Raynor said.

Raynor delivered his testimony this morning before the Senate Judiciary Committee on behalf of UNITE, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and Amalgamated Bank.

UNITE represents over 250,000 workers in the apparel, textile, laundry, distribution and other manufacturing industries across the United States with assets in retirement and other benefit plans totaling over $4 billion.

"Unfortunately, the Enron debacle is no aberration. It is only the most recent and, perhaps, the worst case in a series of securities fraud and self dealing acts by corporate executives centered around a corrupted relationship between corporate executives, their boards, attorneys, and public auditors," Raynor stated.

Raynor continued, "The Big Five audit firms have been engaged in a race to the bottom in financial reporting which has undermined a core element of our capital markets -- the integrity of public company financial reporting. There can be no question these huge consulting fees have undermined the independence of the big accounting firms."

Raynor proposed a six-point plan to improve corporate governance and protect American workers:

1. Restore meaningful access to the courts for investors

victimized by accounting fraud;

2. Reform the bankruptcy laws;

3. Put into place an effective public regulatory organization

over the accounting industry;

4. Ensure corporate directors are truly independent;

5. Reform the accounting treatment of stock options;

6. Reform 410(k)-type retirement savings plans to prevent

employers from pushing employer stock into worker retirement

accounts.

"I will conclude by pointing out that the workers I represent are appalled by what happened at Enron. I wish I could say that they are shocked. But they are not. They are not shocked because what happened at Enron has exposed something that they know very well -- the reality of excess corporate power in our society," Raynor said.

"It is now up to Congress to act, quickly and decisively to protect the American people's retirement income and prevent Enrons of the future. The labor movement and institutional investor community stand ready to work with this Committee and this Congress to adopt true reform legislation," Raynor concluded.

"In the months ahead, we (ENRON) intend -- in the interests of our company, the electricity industry, and American consumers -- to be the people's cops -- to blow the whistle on monopolies and to challenge legislators and regulators to get the job done, done right and done now," -- Ken Lay, August 13, 1997, before the American Legislative Exchange Council.

Copies of Raynor's testimony and the full text of Ken Lay's 1997 speech to the American Legislative Exchange Council are available. Please call Greg Howard @ 301/442-5785.