Enron: The Smartest Guys in the Room

When Enron filed for bankruptcy at the end of 2001, it was a shock to most Americans. But as "Enron: The Smartest Guys in the Room" shows, it shouldn't have been. The documentary, narrated by Peter Coyote, traces the energy giant's origins - including CEO Ken Lay's childhood - to its rise as one of the largest corporations in the United States.

What's really interesting is the intricacy of Enron's actions around the world, and how it pulled off all its shenanigans (aided, of course, by Kenny Boy's contributions to George W. Bush's first presidential campaign). Among Enron's more vicious acts was its manipulation of California's electricity in summer, 2001, and how Arnold Schwarzenegger let the company off the hook. Not to mention that Enron's collapse was accompanied by Lay's draining of the employees' retirement.

Enron's downfall - followed over the next year by the implosions of Adelphia, WorldCom and Tyco - just goes to show the dangers of letting corporations run rampant. The whole way through, the documentary manages to be funny, just at the sight of what Enron was doing, abetted by Arthur Andersen.

All in all, I definitely recommend "E:TSGITR".

PS: In "Bowling for Columbine", Michael Moore proposed a TV show called "Corporate Cops" (based on "Cops!"), in which people like Ken Lay would get strip-searched.

Enron was the US energy company that "Fortune" named as "America's Most Innovative Company" for six consecutive years and, at its height, it employed 22,000 people and claimed revenues of around $100 billion. It went bankrupt at the end of 2001 and this documentary was released in 2005, but I did not see it until four years later. By then, we had experienced 'the end of capitalism as we've known it' and the most serious collapse in financial markets since the Wall Street Crash. What Enron and the wider market crash have in common is the murky world of derivatives, an excessive exuberance for risk, and simple avarice and hubris, while the mother and father of both crises are deregulation.

Alex Gibney co-wrote, co-produced and directed this work which, though occasionally complex, is compelling viewing and a lesson to us all on corporate greed and regulatory failure. Interviews with key observers and extracts from Congressional hearings are linked by a narration from Peter Coyote. The heroines of the story are Bethany McLean, the financial journalist who first questioned the valuation of Enron, and Sherron Watkins, the senior manager who blew the whistle on the company. The villains are a long list of men headed by Enron Chairman Kenneth Lay and Chief Executive Jeffrey Skilling. Maybe there is a gender lesson here as well - as many financial and political ones.

Based on and named after the bestseller book Smartest Guys in the Room, this documentary provides an insightful look into the scandalous fall of Enron Corp. There are no actors in this documentary and yet it is dramatic. Such were the factors leading to the 'amazing rise and scandalous fall' of Enron that even a documentary featuring events preceding that historic day in December 2001, when Enron filed for the largest bankruptcy in the corporate US history, seems like a tale of epic imagination.

This documentary is neither as detailed nor as insightful as the book, but it does a great job of providing an insightful and reasonably detailed account of the Enron saga. Overall, it is not of any incremental value for the people who have read the book. However, if you can't go through 464 pages, this does a great job of enlightening you on the drama that Enron was.

Even after reading Kurt Eichenwald's "Conspiracy of Fools: A True Story", I was not prepared for the near-Greek tragedy presented in this smartly produced documentary of the Enron scandal based on yet another book by journalists Bethany McLean and Peter Elkind. Directed by Andy Gibney, the 2005 film follows the complicated rise and fall of Enron in an easy-to-follow, chronological order since the mid-1980's, using actor Peter Coyote's lucid voice-over narration. Enron started as a moderate-sized Houston gas-pipeline company that grew exponentially, reaping benefits for shareholders and far more so for the Enron executive team for a long, uninterrupted stretch. Billions of dollars were collected due to speculative mark-to-market accounting techniques approved by the SEC, and Enron consequently became one of the world's largest natural-gas suppliers.

What resonates most from this searing film is how circumstantially pathological the chief villains are in this true corporate morality story. While the infamous Ken Lay comes across as the corrupt figurehead we have already come to know through news reports, it's really Enron CFO Andy Fastow (dubbed appropriately "The Sorcerer's Apprentice") and especially President and COO Jeff Skilling, who are mercilessly exposed here. Skilling is portrayed as a brilliant leader and a corporate Darwinist, whose favorite book is Richard Dawkins' "The Selfish Gene", which he apparently translated into a bloodless performance review policy that worked like a genetic algorithm for people. Employees were rated on a 1-5 scale based on the amount of money one made for the company. Skilling mandated that between 10-15% of employees had to be rated as 5's (worst). And to get a rating of 5 meant that one was immediately fired. This review process was dubbed "rank and yank". Such was a typical example of his survivalist thinking.

The corruption spread throughout the company, as Enron was responsible for, among other things, gaming the Northern California "rolling blackouts" in 2001, whereby the company profited as huge parts of the state were plunged into darkness. Citizens were threatened by a deregulation plan that essentially enabled a number of immoral Enron traders (led by Tim Belden) to place calls that drove up energy-market prices and took advantage of power-plant shutdowns. Of course, the Bush family dynasty does not come across unscathed in the Enron story and justifiably so according to their inextricable ties to Lay. Gibney effectively uses video footage from testimony at congressional hearings, as well as interviews with disillusioned former employees such as Mike Muckleroy and whistle-blower Sherron Watkins (who uses some effective pop culture references like "Body Heat" and Jonestown to get her points across).

There are some amusing vignettes and images that tie some of the disparate elements together with excessive glibness. The documentary is best when it sticks to the facts, for this is one inarguable case where fact is truly stranger than fiction. Extras are plentiful on the 2006 DVD. Gibney provides an informative albeit verbose commentary track, and four deleted scenes, about twenty minutes in total, are included that become redundant with the film's portrayal of corporate malfeasance. There is also a fourteen-minute making-of featurette, as well as a "Where Are They Now?" snippet on the principals and three separate conversations with McLean and Elkind on how they got the story, how they validated their findings, and their enthusiastic reaction to the film. Other bonus materials include Gibney reading from scripts of skits performed at Enron and a Firesign Theater sketch about Enron's demise, as well as Fortune Magazine articles written by McLean and Elkind and a gallery of editorial cartoons.

When Enron was granted permission to use mark-to-market accounting it saw the start of the dramatic increase in its profits and its share price. The method allows a company to claim projected earnings from projects once the deal is signed. With this in place Enron was able to earn money without actually earning money. However this could not go on forever and the company was under pressure to continually come up with new ideas to keep the deals and money flowing. And it did so, to the point where it was widely praised within the business community and by stockholders. However things would eventually catch up with the company and a few years ago the company collapsed in bankruptcy before the arrests began.

Working for an American multinational myself I am always interested and critical of the business model of making more and more money and keeping the stock increasing in value being the only way to survive. So I have watched films like this and like The Corporation with interest and appreciate the way that they sell a complex issue in easy to understand ways. With the Enron film it is all the more interesting because it is a prime example of how it all fell down and how easy it is to con the market – which, regardless of the legality of the accounting method used, is basically what they did! The film tells the story well and it is a tale that never struggles to fascinate. Lesser hands could have fudged the telling but the team here structure it well and use footage from Enron and C-Span to really good effect. In fact I did wonder how much this film cost to make because the vast majority of it is stock footage and a handful of interviews.

Although they lay things out well, the film doesn't manage to avoid nailing its colours to the mast; which is a shame because the story is compelling enough and damning enough to work without resorting to cheap digs, funny footage and so on. Sadly it does use this – not to the point of distraction but just to the point where I wondered if the makers didn't think that the facts would be strong enough to make the audience get the point without the extra bit of hammering. The film also stretches to bring in Bush and his cronies as if they were also to blame; it doesn't labour this point but what little it does is stretched – again it could have done less and allowed the audience to draw its own conclusions.

Overall this is not a perfect documentary because it is a bit biased and based on commentary from subjects all on one side of the fence. However it is well structured and easy to follow, stripping away the feared complexity of the tale and telling it in a fascinating and engaging way. A cautionary tale that I doubt that those that needed to learn from have learnt from. Well worth a look and yet another good documentary making it into cinemas.