Labor Dept. Probes WorldCom PensionsJul 23, 2002 | AP
The Labor Department confirmed Tuesday it is investigating WorldCom Inc. to determine whether the company mishandled retirement savings plans of thousands of workers and retirees.
It is the latest of several government agencies, including the Justice Department and the Securities and Exchange Commission, to announce investigations into WorldCom for mismanagement, irregularities or fraud.
Labor's investigation began June 27, two days after the telecommunications company disclosed it had disguised nearly $4 billion in expenses from the investing public.
"Our job is to make sure that plan participants are being protected," said Labor Department spokeswoman Kathleen Harrington. "An investigation was started to determine whether or not all plan decisions were made in the interests of the beneficiaries, not in the interest of the company."
WorldCom filed for bankruptcy protection Sunday, the largest filing in corporate history.
The Labor Department's investigation falls under the Employee Retirement Income Security Act of 1974, which governs retirement plans provided by employers, including profit sharing and 401(k) plans and also health, disability and life insurance plans.
Harrington did not know how many retirement plans WorldCom offered, the value or number of participants. Investigators still are trying to determine that information, which has been difficult to gather because of a large number of acquisitions involving the company, she said.
WorldCom's stock price traded as high as $64.50 in June 1999 but is now virtually worthless. It was not known how much of their retirement savings that WorldCom employees had invested in company stock.
Investigators also are collecting and examining plan documents, plan summary descriptions, investment policy statements, all communications between plans and participants and minutes from any meetings involving plan officials, Harrington said. WorldCom officials have been cooperating with the investigation, and no subpoenas have been issued, she said.
Now that WorldCom has filed for bankruptcy protection, the Labor Department also is monitoring whether the company meets its promised obligations to current workers regarding health insurance coverage and retirement contributions.
"We want to make sure that the contributions promised to the workers are in fact delivered," Harrington said.
The Labor Department also is investigating Enron Corp. and whether officials in charge of the company's 401(k) plans and other retirement investments acted in the interests of participants. Enron employees complained they were temporarily barred from selling company stock from their accounts as the price plummeted, after company officials had urged them to invest heavily in the stock.
The Labor Department removed company officials from oversight of the retirement plans and replaced them with a private investment firm.