Firms may be sued over pension losses

IRELAND’S largest trade union may take a class action lawsuit against multinational companies which have lost significant amounts of employee pension funds through malpractice or inside trading.

SIPTU general secretary Joe O’Flynn said union officials had recently met with US fraud lawyers who were pursuing hundreds of similar cases in America on behalf of employees whose pension funds had been decimated.

“Worldwide, many pension funds have been affected by the downturn in the equities markets following September 11. But since Enron, there have been many cases where pension funds have been essentially destroyed through inside trading and malpractice on the part of company management,” he said.

Mr O’Flynn said every indication was that the fraudulent practices uncovered in America were also an issue here. An estimated 70% of pension funds are invested in equity markets and have been steadily falling in recent years.

SIPTU officials met with Californian firm Milberg Weiss Bershad Hynes & Lerach to discuss the possibility of an Irish case and are confident progress could be made on similar cases here. Another meeting is planned in the coming weeks.

Mr O’Flynn said SIPTU would be prepared to back any case that transpired in Ireland.

“Clearly it’s an issue we are anxious to explore. If we find that there is reason to believe that Irish pension funds have been mishandled then clearly we would feel obliged to consider pursuing an action on behalf of those employees,” he said.

“Certainly the lawyers are confident they will be able to take a similar case here,” he said.

Mr O’Flynn raised the issue as the SIPTU biannual conference in Galway passed a series of motions condemning moves by companies to replace defined benefit pension schemes with defined contribution schemes which generally offer less beneficial terms to employees.

Similar motions also criticised companies who were replacing pension schemes with Personal Retirement Savings Accounts (PRSAs).

Outgoing SIPTU president Des Geraghty said pension schemes must be protected at all costs.

“The collapse of equities worldwide was bound up with a crisis in confidence in the behaviour of many major financial institutions and multi-national corporations.

“Some of them in the USA and Ireland were acting irresponsibly and engaging in such practices as exaggerating their profits to enhance bonuses and share options of senior executives,” he said.