BY EVA CHENG
Despite being the biggest in the US energy business and seventh biggest among all US firms before its December 2 collapse, Enron had not paid income tax in four of the five years before 2000, according to Citizens for Tax Justice.
The group found that Enron had used hundreds of subsidiaries in tax-haven countries, as well as deductions for stock options, to avoid paying income tax. It also used those subsidiaries to hide hundreds of millions of dollars of debts, grossly misrepresenting the company's real financial position.
Enron executives and directors also talked the company's stock price up, which peaked at nearly US$90, reaping millions from exercising stock options (the right to buy or sell designated shares at designated prices) which they had granted to themselves at favourable prices.
With privileged "insider" information, they were able to cash out more than US$1 billion before the company collapsed and prior to the company's share price plunging to less than US$1.
The bulk of the company's 10,000 workers' retirement savings, which were in the form of Enron shares, have been turned to dust. More than 22,000 Enron workers have lost their jobs.
The Enron workers are seeking to launch class actions to reclaim their losses.
Meanwhile, the US film- and camera-maker, Polaroid, which declared bankruptcy in October, has been criticised over a plan to pay bonuses to its executives after it cancelled medical insurance for retirees just days before its bankruptcy was filed, according to Reuters.
Polaroid also suspended benefits for employees on long-term disability and withdrew severance payments for long-term employees, affecting more than 6000 former workers.
A committee representing the company's retirees has been formed and has just won formal recognition in the bankruptcy proceeding. They are challenging the company management's decision to pay executives US$19 million in bonuses.
From Green Left Weekly, February 6, 2002.
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