Enron: The Smartest Guys in the Room

"Ask why" was the mantra of one of the most remarkable companies in the history of modern society: Enron. And not one, not even the venerable accounting firm of Arthur Anderson, asked that question. So the little energy company that could amassed billions of dollars through deceptive accounting practices, mainly by stating profit based on future earnings (HFV=hypothetical future value) and shipping losses to offshore shell companies.

Alex Gibney's absorbing documentary, based on the book co-authored by the first prominent whistle blower and Enron executive, Bethany McLean, begins with the tragic concept of the pervasive fatal flaw, hubris, and applies it meticulously to the tragic figures Ken Lay, Andrew Skilling, and Andrew Fastow. Tragic in the sense that those talented executives allowed the company to fall while they lined their pockets with the assets of its 20, 000 employees, countless investors, and the state of California, which suffered mammoth losses due to its new energy deregulation and manipulation of that energy by Enron.

The documentary succeeds in explaining the crimes while lacing the story with just enough drama to make suspenseful the outcome we all know before we view the film: Fastow is doing time, Lay and Skilling await trial, former employees work past their retirement ages because their pensions have been gobbled up by the crimes, and California now regulates its energy but still suffers from massive deficit.

The documentary fails when it manipulates its audience with background songs that dramatize the obvious ironies, e.g.' "Son of a Preacher Man" plays during Lay's biography. Such skewering is almost impossible to avoid once a documentarian picks up a camera and selects the images; what he doesn't have to do is underscore the irony—The players will do it all on their own. It also seems to hold back on the cozy relationship between Lay and the Bush family. Perhaps another time.

Meanwhile, this documentary is compelling viewing of a tragedy about a company, as one of the talking heads describes, that was "a house of cards . . . built over a pool of gasoline." It is enjoyable to see it figuratively torched like the House of Wax.

This film is a profoundly entertaining chronicle of American corporate power run amok. Profound because as it dramatizes the rise and fall of Enron, the film casts a longer shadow over the still largely unchanged corporate environment that spawned this smoke and mirrors company. Entertaining due to clever use of storytelling devices, imagery and soundtrack, despite what looks to be a low budget.

The film's strength is in its portrait of the massive "group think" inside and outside of the corporation that supported Enron's rise. It is astounding and chilling to look back on the cheer leading role played by banks, financial media, accounting firms and government. And though Enron, the film, may be weak on explaining how the company built itself up from a simple gas pipeline business to a post-modern corporate megalith, it was probably a wise choice to leave detailed descriptions of the financial manipulations to the book of the same name. The film, does though, miss an opportunity early on to provide a basic explanation of the central paradox of Enron -- earning heaps of money by exploiting commodities trading and accounting methods, while losing heaps of money in real world ventures. Enron set up its first commodities trading desk to capitalize on inside knowledge of the gas business, and then tried to replicate this model with water, broadband, electricity, etc. In actually a trading firm, Enron evaded investment firm regulations by portraying itself as an industrial firm.

Yet, despite some shortcomings, the storytelling is powerful, especially the eye-opening dramatization of Enron's role and the political manipulations behind the California energy-crisis. After viewing the suffering of average Californians, juxtaposed against the callousness of Enron's West Coast energy traders, it felt good to see Kenneth Lay walking in handcuffs.

More than once, the phrase, "this can happen again," echos in the film. It has happened before -- leveraged buyouts, the Savings and Loan crisis, the burst Internet IPO bubble, the 1920s Stock Market crash. A new financial vehicle generates untold riches for some, goes bust, and millions, sometimes billions ... disappear. Enron, the film, is the textbook on how one corporation recently stole from investors, employees and its "customers."

Ask why do we keep on letting this happen.

One powerful theme in "The Smartest Guys in the Room" is expressly articulated and repeated for emphasis: this is the story of people, not arcane financial accounting methods or numbers, and because it is people, it can happen again. Enron is just the manifestation of the evil begotten by hubris, in spectacularly public fashion. It is classic Greek tragedy, and it is one from which its chief protagonists, Ken Lay and Jeff Skilling, must not escape.

Yes, it is a movie with a point of view, but this is not a Michael Moore documentary. Director Alex Gibney brilliantly tells the story simply by interviewing people who were participants in the events, showing the time lines of those events, and interweaving an astonishing amount of video and audio footage taped at Enron, by Enron itself. The movie resolved for me the question: "What did they know, and when did they know it?" They knew. They not only knew; they designed the company to be the ultimate shell game, with no pea. The only thing Enron ever had to sell was its stock price. And they did know that was their only product.

As a Houstonian, I admit that I, a supposedly sophisticated business professional, was intimidated by Enron's assertion in its glory days that the reason I didn't understand its business was just that I wasn't smart enough. My friends, managers and lawyers, some from Harvard thenselves, also admit to the same intimidation. It was not that the questions were not being asked; it was just that we were silenced when Enron avowed that they were the smartest guys in the room. They asserted it, and we believed them. Thank good Fortune that one reporter, Bethany McLean, in almost too soft a voice to be credible as a giant killer, kept asking.

I wish this movie might inspire a larger remedy than the one being attempted by the Department of Justice. Why doesn't Harvard deny admission to people like Jeff Skilling, who, when questioned in his entrance interview whether he was smart, replied, "I'm (expletive deleted) smart"? Why isn't some humility and modesty still ranked a virtue? Why do we celebrate the rise of the specialist educated only in his field, and wholly ignorant of the inevitability of the fall of the Greek protagonist who becomes blinded by arrogance, power, greed---- in short, hubris? Why is ethics a specialty study, instead of integral to every field of study? I sat open-mouthed as the tape showed Jeff Skilling seriously selling a new business idea: selling futures in the weather. He parodied himself on tape: he had a new, better idea than the "mark to market" booking which allowed Enron to book future theoretical profits once they had signed a deal; now he would institute "hypothetical to book", booking profits as soon as he had an idea. What, ultimately, was the difference between the parody and the reality? The horror of listening to traders, who sat in a room directly below Ken Lay and Jeff Skilling, with staircases between their executive offices and the trading floor, laughing at the misery they were inflicting on California as they extorted profits from that misery, leaves me outraged long after the movie is over. They threatened and may have cost lives with their fraudulent tactics. They admit it on tape, laughing. They knew. It was their business plan. To make Andrew Fastow the scapegoat for what Enron was developing as its business plan before he was ever hired is simply the continuation of the shell game with no pea. Look for the "designated fall guy". They still think they are the smartest guys in the room.

No, I'll never be selected for the jury pool now, but I wouldn't have been anyway. I'll buy the DVD and watch it a few times during the trials and seethe, lest I forget. Excellent movie, the best kind of documentary.

I just saw this movie at Talk Cinema in Philadelphia. It was an excellent depiction of hubris and greed. The clips of Ken Lay et all were self serving and only seemed to intensify their greed. I would have liked more exploration in to the ties with the Bush Dynasty but that said it was an interesting intense film. Definitely one that I would be happy to recommend. There is one critique I would make is that although the film touched on the many lives that were ruined by the Enron Scandle,it did not give them a real human face.

In the eighties we called people like the Enron Executives "Masters of the Universe." Now we can call at as we see it, Over grown former nerds with no morality and no conscience.

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The chief characters in the Enron debacle all seemed to be functioning on the same mantra, that Gordon Gekko line from "Wall Street" (1987) that epitomized the 1980s: "Greed, for the lack of a better word, is good." Except what Ken Lay, Jeff Skilling and Andy Fastow did wasn't in the 1980s, but in this century and they blithely and without any compunction did it for personal gain while tens of thousands were left with nothing.

The Enron scandal was a tough one to understand, at least to me it was, because you could never quite figure out what Enron did. And director Alex Gibney breaks it all down matter-of-factly, never taking sides, never being judgmental, to show us what happened. Of course, he really doesn't need to be judgmental because the actions of Lay, Skilling and Fastow (and a few others) speak volumes.

Gibney's film very well could have been a convoluted mess. But he never loses sight of the fact that this is essentially a story about people. Not only the masters of the universe whose hubris eventually brought them down but, more importantly, the people whose livelihoods depended on what Lay, Fastow and Skilling did and who, unlike those three, didn't have millions to fall back on.

It's impossible not to feel incensed by what they did. Lay, Fastow and Skilling destroyed countless lives, yet they left with millions. There's a moment when Lay bemoans that his net worth dipped from $20 million to, I believe, $6 million. Yeah, tell that to the Oregonian utility worker, whose $340,000 nest egg was eventually only worth $1,200 after Enron stock tumbled in the wake of the scandal.

What's ultimately devastating about this film is listening to the tapes of Enron traders joking about how they were holding California hostage and letting people there suffer without electricity. These chaps are cold, callous and exemplify the Enron environment.

This is a fascinating film because it exposes these guys for who they are. And after listening to those interviewed in this film, it's impossible to believe Lay and Skilling were somehow oblivious to it all. How else could you explain why they insisted Enron employees invest in the company stock while they themselves were cashing out?

What's equally infuriating is realizing how Wall Street sucked up to Enron and how investment firms turned on anyone who dared to question Enron's power.

Of course, it's not surprising at all to see Lay's connections to the Bush family. But I am certain Dubya really didn't know very well someone he called "Kenny Boy." Just as, I'm sure, W's photos with Jack Abramoff mean absolutely nothing, either.

There's a moment in "Wall Street" when Bud Fox asks Gordon, "How much is enough?" And Gordon replies, "It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another."

That's exactly what Enron did under Lay and Skilling. Except they did it on the backs of tens of thousands of hard-working Americans who lost pretty much everything. I can only hope the American justice system does right by all those workers.