Herman Cain’s calling card is his business experience and acumen. But what if he were associated with a scandal not unlike Enron, in which an energy-trading company wiped out the life savings of employees and got snared in massive litigation?

Cain sat on the board of Aquila, a company that started out as a family-run energy company. As an ABC news report mentioned in passing: “The Kansas City-based company and Cain faced allegations that employee retirement funds were heavily invested in company stock when the company was changing to investments to ‘high risk enterprises.’ The complaint states, ‘... the risk profile of the Aquila Fund drastically transformed from a conservative utility investment to a high risk growth stock.’ The company settled the suit for $10.5 million.”

The class-action lawsuit filed against Aquila, Cain and the other directors of the company in 2004 alleged:

Defendants directed, caused, encouraged and/or permitted the Plan and Plan participants to purchase or hold shares of an undiversified fund containing almost exclusively shares of Aquila common stock, the Aquila, Inc. Common Stock Fund (the “Aquila Fund”), when it was imprudent to do so because Aquila was shifting its business strategy from that of a traditional, public utility to that of a speculator in the energy markets — clearly a high risk enterprise. Indeed, during the Class Period, the risk profile of the Aquila Fund drastically transformed from a conservative utility investment to a high risk growth stock. This focus on energy trading continued even after it was revealed that even the largest and apparently most successful energy trader — Enron Corp. — could only sustain its operation through illegal market manipulation and accounting chicanery.

The Aquila Fund was also imprudent as a retirement investment because Aquila’s common stock price was artificially inflated as a result of its participation in the manipulation scheme wherein Aquila participated in energy transactions whereby the Company bought and sold the same amount of energy from the same counterparty at the same time and at the same price (“Roundtrip Transactions”), and also as a result of revenues and earnings received by Aquila from wrongful manipulation of the energy markets. Furthermore, the Aquila Fund was an imprudent retirement investment because the Company’s leveraged financial position combined with the rapidly deteriorating energy trading marketplace and heightened credit demands exposed the Company to financial demands that put the Company on the brink of collapse.

Cain was not only on the board but was a member of the compensation committee that rewarded executives with stock grants. He and other members of the compensation committee were responsible, according to the suit, for administering compensation policies and reviewing the operation. Moreover, as a board member (albeit an outside member) he had the obligation to exercise oversight of the company’s business plan and management team.

I spoke to one of the lawyers on the case, Fred Isquith. He explained that Cain was not a trustee on the stock plan in question but that the literature sent out by the company was misleading and therefore the board was “collectively responsible” for the losses suffered by plan participants. In essence, the company had transformed itself from a utility to a high-flying energy-trading company like Enron, but that was not disclosed to the employees, who were being encouraged to put their retirement funds into the company’s stock.

I asked Isquith if the settlement had compensated the employees in full. He said, “It was a pretty good settlement,” but added that in a settlement, there is a compromise plus the cost of litigation and lawyers.

I sent a list of questions to the Cain campaign about the lawsuit. I asked if Cain was ever deposed in the lawsuit. Spokesman JD Gordon said he was not. I then asked: As head of the compensation committee, was he responsible for the stock purchase plan at the center of the lawsuit? What does Mr. Cain say to those who lost their life savings? Does Mr. Cain think he behaved responsibly and exercised sufficient due diligence in monitoring Aquila’s stock trading ventures? Why should voters not hold this incident against Mr. Cain as someone touting his business experience?

I received a canned answer that was not responsive to any of the questions I asked. Gordon replied, “Aquila kept management team to get through restructuring. Going through restructuring is not the time for management to turnover. For several years that top management team did not receive any bonuses. Only after company leadership saw that Aquila would avoid bankruptcy, the board saw fit to reward them for their efforts. Bottom line, as to where Enron went bankrupt and bust, Aquila was able to avoid to bankruptcy. The management and board saved company. Then Aquila was bought out by Kansas City Power and Light.” In fact, the company ceased to exist as a viable venture and a great number of people lost jobs and savings.

Cain’s spokesman seems to be answering a question I did not ask: Why did the board not fire senior management? But what he did not answer is whether Cain and the other board members exercised proper oversight of the company. That the company did not go into bankruptcy but instead was bought out by another firm is not of great consequence to those who lost jobs or savings. Moreover, the lack of concern about those who suffered financial setbacks is bracing.

Cain should be asked to explain his role in the demise of the company and the litigation. Was he asleep at the wheel, not only with regard to the misleading literature touting the stock plan, but with regard to a high-risk business that management and the board did not fully understand? He’s touting his management skills, but voters are entitled to know how good they really are.