Launch of Executive PayWatch 2002
Richard L. Trumka
AFL-CIO Secretary-Treasurer
April 2002 (3:26)

Full Text of Audio Clips

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Lessons Learned From Enron (1:33)
We have a system that’s out of control. We have runaway corporate executive pay, you have board of directors who are supposed to be independent that are in the hip pocket of most of management. You have accountants who make 20 times more on consulting fees than they do auditing fees so they will say virtually anything management wants them to say in the audit. For the last couple years, you have investment bankers who first lend money, as in the case of Enron, lend them big amounts of money, compete for fees and then say we’re analyzing and telling the public whether to buy or not to buy.

AFL-CIO is saying, look, this is a system that's out of control. It’s built on conflict of interest, it’s built on self dealing, it’s built on family dealing. You have to control it in order to protect workers, protect the shareholders and protect our communities.

So the lesson is—we have to reform the system. We have to help the workers that are there, and I’d say the lessons are threefold. One, we need to investigate and find out precisely what happened. Two, we need to compensate those workers who have been hurt through no fault of their own. And three, we have to massively reform the system so that Enrons don’t happen again.

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Union Members Mobilize In Enron Workers' Fight For Justice (1:00)
I think that what Enron did to every worker, including their own, is breach the trust, break the faith and say to them in the very end, unless you have a union, you have no protection whatsoever because no matter how good a corporation professes to be, when it comes down to whether it's your best interest, or their individual best interest, you'll always come last. What we've done is try to give those workers voice. We've tried to give them hope, we've tried to give them the solidarity of the rest of the labor movement.

We're providing job services to try to help them get a new job. We're trying to reform the system so that the millions of other American workers out there aren't ever put in the same position that Enron's greedy executives put their workers in.

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Laid-off Workers Deserve Fair Severance Package (:54)
The employer had a policy that said that everybody would get a severance pay. It was in writing, it was in black and white, it was promised to every employee. But two days before they declared bankruptcy, Enron wrote checks to the executives and gave them millions and millions and millions of dollars and they called them retention bonuses. They had to give them to the management so that they wouldn’t leave. And then the day after bankruptcy was declared, they issued severance checks to many of the workers, knowing that the bankruptcy court would not honor the checks or the dissemination of assets that occurred after bankruptcy was declared by Enron. So those people were left with virtually nothing.

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Working Families Stand to Lose More Without Reforms (1:39)
The AFL-CIO is doing several things to protect workers from future Enrons. First of all we’re letting everybody know that Enron is not an aberration—that it is not the only one out there—that there are more and more many more Enrons potentially out there if the system isn’t changed to do something to protect workers and shareholders. The second thing we're doing is asking for legislative change in front of the SEC, in front the Congress testifying to have them change the laws, to make directors truly independent, to make auditors, truly independent—to eliminate the conflict among and between them—to make sure that the analysts who recommend to buy and sell, are conflict of interest free, so that they don't have a conflict. All of those things we're trying to do right now to protect the future of retirement security of workers and the communities and the investors that are out there. They are a little skittish right now; they are not real anxious to invest because they don't believe the system is transparent enough. They don't believe that the system gives them the proper information they need to be able to make fair and reasonable judgments on investments. And I believe, quite frankly giving Enron and the many Enrons that are about to fall, they are absolutely correct in their skittishness.

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Enron Underscores the Risk of Privatizing Social Security (2:18)
Anybody who would dare advocate privatizing Social Security after the Enron debacle is either captive to Wall Street or doesn’t really understand the system at all. I mean we’ve told workers all alone that there are two types of pension plans. There is a defined-contribution plan, and that’s a 401(k). That’s where you employer says, “I’ll give you so much to put into your retirement fund and whatever happens, the risk is all yours.” That’s a 401(k). Those employees who had 401(k) plans with Enron, some that had 30-35 years of service, ended up with virtually nothing to retire on. The second type of retirement plan is a defined-benefit plan where the benefit is defined at the end of the time. Social Security is a defined-benefit plan, all the risk in that type of plan is on the employer, not on the employee. And you ought to know this, there were two types of plans at Enron. The Sheet Metal Workers had a defined-benefit plan; other workers had a defined-contribution plan. Today, the only group of workers who still have their pensions, in total, 100 percent are the Sheet Metal Workers who had the defined-benefit plan. Now Social Security is a defined-benefit plan, the risk is on the government to provide you with a minimum level of retirement income and anybody in today’s age, after Enron and Global Crossing and several other ones, etc., Waste Management—all those big failures—anybody who would suggest that we now take the risk off the government and give it to a worker, I think that they are just foolhardy. And you could actually say that there’re being near reckless because with a system that doesn’t give you true information because of conflicts between the analyst, conflicts between the accountants, conflicts with the board of directors, you don’t know whether you’re getting true information or not. The only safe retirement today is to have a defined-benefit plan.