Central Laborers Pension Fund, Jacksonville, Ill., filed a lawsuit against Ashland Inc., Lexington, Ky., citing accounting indiscretions, securities fraud and abuses of corporate assets. The $878 million plan, an Ashland shareholder, alleges that the company's stock went into a "price freefall from over $55 in mid-1998 to below $32 in late 1999" as a result of gross mismanagement, according to the suit. The suit, filed in Kenton County Circuit Court, Covington, Ky., names outgoing CEO Paul Chellgren, Ashland's board of directors, several top executives and auditor Ernst & Young as defendants. Mr. Chellgren earlier this month announced he would resign as a result of violating company policy on office romances.
"While Ashland Inc. has a longstanding policy not to comment on pending litigation, this lawsuit is groundless and without merit and we will defend it vigorously," said Stan Lampe, Ashland director of corporate media relations. Les Zuke, associate director of public relations for Ernst & Young, said: "We are confident our work was in accordance with professional standards. The case has no merit whatsoever."
Attorneys in the case did not return calls seeking comment by press time.