Enron bosses in $168m payout

Eighteen former Enron directors have agreed a $168m (£89m) settlement deal in a shareholder lawsuit over the collapse of the energy firm.

Leading plaintiff, the University of California, announced the news, adding that 10 of the former directors will pay $13m from their own pockets. The settlement will be put to the courts for approval next week. Enron went bankrupt in 2001 after it emerged it had hidden hundreds of millions of dollars in debt.

Before its collapse, the firm was the seventh biggest public US company by revenue. Its demise sent shockwaves through financial markets and dented investor confidence in corporate America.

"The settlement is very significant in holding these outside directors at least partially personally responsible," William Lerach, the lawyer leading the class action suit against Enron, said. "Hopefully, this will help send a message to corporate boardrooms of the importance of directors performing their legal duties," he added. Under the terms of the $168m settlement - $155m of which will be covered by insurance - none of the 18 former directors will admit any wrongdoing. The deal is the fourth major settlement negotiated by lawyers who filed a class action on behalf of Enron's shareholders almost three years ago. So far, including the latest deal, just under $500m (£378.8m) has been retrieved for investors.

However, the latest deal does not include former Enron chief executives Ken Lay and Jeff Skilling. Both men are facing criminal charges for their alleged misconduct in the run up to the firm's collapse. Neither does it cover Andrew Fastow, who has pleaded guilty to taking part in an illegal conspiracy while he was chief financial officer at the group. Enron's shareholders are still seeking damages from a long list of other big name defendants including the financial institutions JP Morgan Chase, Citigroup, Merrill Lynch and Credit Suisse First Boston. The University of California said the trial in the case is scheduled to begin in October 2006. It joined the lawsuit in December 2001alleging "massive insider trading" and fraud, claiming it had lost $145m on its investments in the company.