Film — Enron: The Smartest Guys in the Room (NR)

Enron: The Smartest Guys in the Room (NR)

by Amy Diaz

Enron’s suspicious rise and astonishing fall is the subject of the plucky documentary Enron: The Smartest Guys in the Room.

Enron’s slogan was “ask why” and as the movie ends, one of the former Enron traders summed up his time at the energy trader and provider by saying that he now realized he should have asked why more. By that point we believe that not only the trader but everyone involved in Enron to include the FSEC, California energy officials, company’s investors, employees at all levels, major banks, the financial industry and the financial media should have asked why. Why and how — as in, “how is Enron making its money” and “how will the stated profits translate into actual capital?”

Because, as the documentary by Alex Gibney based on the book by Bethany McLean and Peter Elkin shows, Enron used a system of accounting that separated the company’s profit claims from the basic cash-in, cash-out. Enron counted future and eventually potential profits as though they were money in the bank, a method that pushed its stock prices to astronomical levels until the late summer of 2001, when the price began to plummet as the numbers were exposed for the fiction they were. The movie tells the story of what now looks like breathtaking arrogance and obvious corruption in the way the company built its fortunes in the late 1990s. The characters that created the company — Ken Lay, Jeffery Skilling, Andy Fastow and Lou Pi — are larger than life as are their flaws. All seemed to operate on a level of amorality, delusion and greed that would astound the Gordon-Gekko-ish traders of the 1980s. All of the executives seemed to have stories of sleaze best illustrated by Lou Pi, an executive who got out of Enron before its crash, and used his millions to secure a life for him and his stripper-girlfriend turned second wife. Though Pi is the most extreme example, all of the Enron executives seemed to demonstrate the worst side of the self-made-wealthy, people who make up for perceived vulnerabilities with ruthless greed and unfounded bravado.

Of course, with the exception of archive footage, the subjects in the documentary share our anger at the company, even the former Enron employees. Most unforgiving and pointed in his rage is Gray Davis, former California governor who saw his political fortunes fall thanks in part to the Enron-created California energy crisis. Davis also points a finger at the Bush White House, which had close ties to Enron and did nothing to help California get control of its energy needs.

The movie tells this story with a lively pace and enough basics to keep even the most financial neophyte comfortable with the details of the scandal. It’s a fascinating examination and an excellent warning for investors, employees and reporters alike against believing the façade of any big company without taking the time to look at what’s propping it up.

- Amy Diaz

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