Enron: The Smartest Guys In The Room
In the 1987 film ‘Wall Street,' Gordon Gekko, played by Michael Douglas stated "The point is ladies and gentlemen that greed, for lack of a better word, is good. Greed is right. Greed works." That may work for those unscrupulous individuals who wield the economic might but for those innocent people who invest their life savings in hopes of a secure future greed is perhaps the most deadly weapon ever employed. In 2001 most people immediately realized the devastation inflicted on the World Trade Center, but far fewer were aware that there was another crash that would devastate many lives, the high-stakes con game known as the Enron Corporation fell apart at the seams. Based on the book by Fortune Magazine reporters Bethany McLean and Peter Elkin, "Enron: The Smartest Guys in the Room" directed by director Alex Gibney details the rise and fall of the most influence corporate scandal in modern times.
In 2001 McLean and Elkin published an article that shook the financial world, ‘Is Enron Overvalued?’ Before that most investors saw Texas-based energy trader Enron for what it was on paper, the seventh largest corporation in the United States. McLean and Elkin laid out a case against the price of Enron stock showing that their profit statements were little more than smoke and mirrors. In 1985 InterNorth acquired its main competitor Houston Natural Gas, a deal put together by HNG’s CEO Kenneth Lay. As soon as the merger was complete Lay emerged as the chief executive officer of the combined corporation renaming it Enron. Lay moved up to the chairman of the board, and along with his successor as CEO Jeffrey Skilling, they came up with an idea for the unimaginably rapid influx of money. What they came up with was a high-end variation of the old Ponzi pyramid scheme called Mark to Market. If Enron could anticipate $50 million in profits from a given venture which would pay off in ten years they would claim the income as funds as current income. CFO Andy Fastow then would create a maze of shell companies to obfuscate the actual flow of money and hid the staggering real debt Enron was in from the investors. While the price per share was over $90 in 2001, the corporation was, as noted in the documentary, a house of cards built over a vat of gasoline.
Some in the audience set out to watch this movie with preconceived notion that a documentary about greed in a large corporation to be dry, intrinsically lacking entertainment potential. The main people involved in this affair were quite colorful. Lay was the son of a Baptist preacher who was a close friend of President George W. Bush. Bush affectionately called Lay, ‘Kenny Boy.' At one point there was even serious speculation that the President would name Lay as the Secretary of Energy. The right-hand man for Skilling was Lou Pai who had a certain eye for strippers and headed up the speculative arm of Enron, The Enron Accelerator Group. He managed to sell off an incredible amount of the bloated stock just before the bottom fell out. There was a dark humor in how some of the dummy corporations were named. For example, one was M. Smart, named for television secret agent, Maxwell Smart. Towards the end, it was difficult actually to tell just what products and services Enron provided. They made a deal after deal banking on energy futures moving vast sums of money around. It was the ultimate paper chase, and at least for awhile the money pours in for the top executives. Soon enough what was going on was becoming apparent to lower levels of Enron’s management. Sherron Watkins was a vice president of Enron for many years moving over from the lamented accounting firm of Arthur Andersen. In 2001 she wrote Lay a memo warning him of potential problems in the financial structure. She would find herself before the Senate investigation, her testimony crucial to uncovering just what happened. She was named Time Magazine’s Person of the Year in 2002 for her whistleblowing.
The dominoes began to fall upon each other as the scam began to unravel. One of the most famous instances of collateral damage was the Arthur Andersen, LLC, the principal accounting firm for Enron. The documentary spreads out the involvement showing it would be impossible for an accounting firm of this stature not to have an idea of what was going on over at Enron. With billions of dollars in play, they had the records and ultimately were blamed by their former largest client. The downward spiral continued uncovering even more heinous activities can into the light of day. Enron was closing perfectly good energy plants to maintain high prices in the future market artificially. What this did become a major contributor to the energy crisis that hits states like California leaving millions of people contending with rolling brown outs. As the stock was showing its first signs of decline the Enron executives ditched their holdings as quietly as possible, advising their employees to buy more stock, invest more of their pensions in Enron, assuring them the price would come back. It didn’t and thousands of people who trusted Enron where broke. Many had holdings one worth near a half million and watched as the future fell to a mere thousand r so.
They sheer gall this cabal of executives showed as incredible. They went beyond just greed, on to hubris the likes of which history as rarely seen. As the documentary shows, they seemed to feel privileged, above ad beyond the common masses. It was not so much they could get away with their schemes, they felt they deserved it. The looted companies, falsified profits, created a phony energy crisis in California all in the name of their bottom line, as long as they could take their cut all was right with the world.
Alex Gibney may not be as well known as the other politically concerned documentary maker, but his talent is up there, perhaps a notch above. This topic is such that Gibney requires no hyperbole at all, no showy stunts are required. He just has to lay the almost unbelievable truth out for the audience and let them make the connections. Gibney does interject numerous pop songs to keep the film’s pace moving long. At times it was annoying, but it is understandable that this is part of the genre at this point. The notation by actor Peter Coyote is excellent. His voice lends itself to just the right touch of sarcasm. Instead of just talking heads and reenactments this film depends on presenting the facts by those that knew them. The style is straightforward, paced well and will grab your interest almost immediately.
The DVD is excellent, one of the best presentations of a documentary I have ever seen. The film itself runs about an hour fifty minutes but never drags. The video and audio are excellent. The dialogue was presented clearly; the video well balanced. For a documentary about a recent scandal, this DVD has a surprising number of extras. Some deleted scenes truthfully would have dragged a bit if inserted in the actual film but where interest to watch anyway. There is a making of featurette; nice but just chronicles how the information was gathered. Just about the best in the way of extras were the company skits and original company commercials and a gallery of the plethora of Enron op-ed cartoons. This is a must have film to watch and own. It will entertain and inform, but mostly it will frighten that this happened.
Posted 1/16/06 05/30/2017