This was researched and written a few months ago when this first came out via Mother Jones by Cain supporter Mike Cessac.
"I've actually read the original opinion article posted at MotherJones. I took down much of the information that was claimed and researched it. Here are some of the facts I found.
Herman Cain served on the board of directors for Utilicorp United Inc. from 1992 to 2003. Aquila Energy Corp.--as PSI Inc. was later renamed--was made a subsidiary of UtiliCorp, and in addition to its marketing functions, expanded into such related, but unregulated, areas as natural gas storage and transmission. By 1990 Aquila was responsible for 21 percent of UtiliCorp's earnings.
In 1992, Congress enacted the Energy Policy Act. This legislation allowed utilities and other entities to build electric generators and to sell the power produced at unregulated prices on the wholesale market. In doing so, it unleashed a series of changes in the previously staid utility industry unmatched since its birth about a century previously. This also lead to the Emergence of Enron and other energy trading companies competing in the natural gas market for electric generation. Natural gas prices had doubled by November 2000, and then crashed by February 2001.
In December of 2000, Utilicorp announced a plan to spin off Aquila, and had sold off 20% in stock. However after the crash of the NG prices in 2001, Aquila started to collapse without the force of structure of Utilicorp. So Utilicorp announced it would buy back stock in Aquila to try and save it. Utilicorp assumed the name of Aquila Inc. after the re-merger. This crash in the prices of natural gas along with the recession hit the entire company hard in both stock and net worth. This was during the same time Enron went down in flames.
The lawsuit against Aquila was a result of employees wanting to invest too much of their matching stock into the company, which was showing huge returns. The employee retirement fund had over 50% of it's holding in company stock, but regulations from 1933 was supposed to limit this to no more than 20%. Employees in the lawsuit claim that the company either encouraged them or didn't prevent them from investing too much directly into the company.
The board of directors had separated itself into three committees to oversee different aspects of the company early on. Herman Cain was the chairman of the compensation committee that oversaw pay and bonus' for executives and other positions. The bonuses that he approved were in line for the time when the entire company was seeing high profits in the late 90's. Bonus's are based on the previous year performance. The financial problems with Aquila didn't show up until mid 2001 during the recession.
There was a Pension and Benefits committee and a retirement committee. Herman Cain was not on either one of those. Thus Cain didn't come across the activity and paperwork to see what was going on with these committees. The lawsuit that was filed named all sorts of people at the top, even if they didn't have basic oversight at issue with the lawsuit. It even named people who came on board later after the period named in the lawsuit. Class action lawsuits tend to ensnare anyone and everyone that might be remotely responsible in the hopes of catching something."
The MotherJones article author took a few general details and then made all sorts of claims that weren't in the lawsuit they referenced. What we do know factually, is that Herman Cain was not on the committee that oversaw pensions and benefits, nor did he have a hand in the investment of employees money. We also know that Aquila survived an era that caused the demise of other utilities, and, in fact, was purchased and merged into a larger one. We can also assume that, in an era where the improprieties that plagued Enron and ultimately caused significant legal woes for its executives, the legality of every move taken by Aquila was scrutinized legally.
