Enron: The Smartest Guys in the Room

Enron: The Smartest Guys in the Room
Theatrical release poster
Directed by	Alex Gibney
Produced by	Alex Gibney
Written by	Bethany McLean Peter Elkind Alex Gibney
Starring	Andrew Fastow Jeffrey Skilling Kenneth Lay Peter Coyote Gray Davis
Music by	Matthew Hauser Marilyn Manson Tom Waits
Cinematography	Maryse Alberti
Editing by	Alison Ellwood
Distributed by	Magnolia Pictures
Release date(s)	April 22, 2005
Running time	109 min.
Country	United States
Language	English

Enron: The Smartest Guys in the Room is a 2005 documentary film based on the best-selling 2003 book of the same name by Fortune reporters Bethany McLean and Peter Elkind, a study of one of the largest business scandals in American history. McLean and Elkind are credited as writers of the film alongside the director, Alex Gibney.

The film examines the 2001 collapse of the Enron Corporation, which resulted in criminal trials for several of the company's top executives; it also shows the involvement of the Enron traders in the California electricity crisis. The film features interviews with McLean and Elkind, as well as former Enron executives and employees, stock analysts, reporters and the former Governor of California Gray Davis.

The film won the Independent Spirit Award for Best Documentary Feature and was nominated for Best Documentary Feature at the 78th Academy Awards in 2006.

Synopsis

The film begins with a profile of Kenneth Lay, who founded Enron in 1985. Two years later, Enron became embroiled in scandal after two traders began betting on the oil markets, resulting in suspiciously consistent profits for the company. Enron's CEO, Louis Borget, was also discovered to be diverting company money to offshore accounts. After auditors uncovered their schemes, Lay encouraged them to "keep making us millions". However, the traders were fired after it was revealed that they gambled away Enron's reserves, nearly destroying the company. After these facts were brought to light, Lay denied having any knowledge of such wrongdoing.

Lay hired new CEO Jeffrey Skilling, a visionary who joined Enron on the condition that they utilize mark-to-market accounting, allowing the company to book potential profits on certain projects immediately after the deals were signed, whether or not those projects turned out to be successful. Therefore, Enron could subjectively give the appearance of being a profitable company even if it wasn't. Skilling imposed his Darwinian worldview on Enron by establishing a review committee that graded employees and annually fired the bottom fifteen percent, who were deemed unsuitable for the company's objectives. This created a highly competitive and brutal working environment.

Skilling hired lieutenants who enforced his directives inside Enron, known as the "guys with spikes." They included J. Clifford Baxter, an intelligent but manic-depressive executive; and Lou Pai, the CEO of Enron Energy Services. Pai was notorious for using shareholder money to feed his obsessive habit of visiting strip clubs, and for allegedly inviting strippers into his office and the Enron trading floor. Pai abruptly resigned from EES with $250 million, soon after selling his stock. Despite the amount of money Pai had made, the divisions he formerly ran lost $1 billion, a fact covered up by Enron. Pai used his money to buy a large ranch in Colorado, becoming the second-largest landowner in the state.

With its success in the bull market brought on by the dot-com bubble, Enron sought to beguile stock market analysts by meeting their projections. Executives pushed up their stock prices and then cashed in their multi-million dollar options in a process called "pump and dump." Enron also mounted a PR campaign to portray itself as profitable and stable, even though its worldwide operations were performing poorly. One major failure was the Dabhol Power Plant in India, which Enron built to defy an industry fear of investing in that country. However, Enron abandoned the plant when India couldn't afford the power it was producing, losing $1 billion. Elsewhere, Enron attempted to use broadband technology to deliver movies on demand, and "trade weather" like a commodity; these initiatives also failed. However, using mark-to-market accounting, Enron recorded non-existent profits for these ventures.

Enron's successes continued as it became one of the few Internet-related companies to survive the dot-com bubble burst in 2000, and was named as the "most admired" corporation by Fortune magazine for the sixth year running. However, Jim Chanos, an Enron investor, and Bethany McLean, a Fortune reporter, questioned irregularities about the company's financial statements and stock value. Skilling responded by calling McLean "unethical", and accusing Fortune of publishing her reporting to counteract a positive BusinessWeek piece on Enron. Three Enron executives, including CFO Andrew Fastow, met with McLean and her Fortune editor to explain the company's finances.

Fastow created a network of shell companies that were designed to solely do business with Enron, for the ostensible dual purposes sending Enron money and hiding its increasing debt. However, unbeknownst to Lay and Skilling, Fastow had a vested financial stake in these ventures, using them to defraud Enron of tens of millions of dollars. Fastow also took advantage of the greed of Wall Street investment banks such as CitiBank and Merrill Lynch, pressuring them into investing in his shell entities and, in effect, conduct business deals with himself.

Cast

• Peter Coyote (narrator)
• Bethany McLean – Fortune reporter; co-author, The Smartest Guys in the Room
• Peter Elkind—co-author, The Smartest Guys in the Room
• Sherron Watkins – Enron whistleblower; co-author, Power Failure
• Mimi Swartz—co-author, Power Failure
• Mike Muckleroy—former Enron executive
• Amanda Martin—former Enron executive
• Charles Wickman—former Enron trader
• Colin Whitehead—former Enron trader
• John Beard—former Enron accountant
• Max Eberts—former spokesman, Enron Energy Services
• Bill Lerach – attorney for Enron stockholders
• Gray Davis – former governor of California

Reception

Upon release, Enron: The Smartest Guys in the Room was met with strongly positive reviews. The film has a "Certified Fresh" rating of 97% on Rotten Tomatoes, based on 115 reviews; on Metacritic, it has a "Universal Acclaim" rating of 82%, based on 37 reviews. Film critic Roger Ebert, writing in the Chicago Sun-Times, gave the documentary three-and-a-half out of four stars, commenting that, "This is not a political documentary. It is a crime story. No matter what your politics, Enron: The Smartest Guys in the Room will make you mad". Ebert's co-host on the television program Ebert & Roeper, Chicago Tribune critic Richard Roeper, said that the documentary was "a brilliantly executed, brutally entertaining dissection of what one observer called the greatest corporate fraud in American history." A. O. Scott of The New York Times called the film a "sober, informative chronicle of the biggest business scandal of the decade is almost indecently entertaining."

An edited version of the film aired on the PBS documentary series Independent Lens. It was nominated for an Academy Award for Best Documentary Feature at the 78th Academy Awards in 2006, but lost to March of the Penguins.

See also

• Enron scandal
• Timeline of the Enron scandal
• The Corporation
• Conspiracy of Fools
• List of documentaries

External links

• Enron: The Smartest Guys in the Room at the Internet Movie Database
• ENRON: The Smartest Guys in the Room site for Independent Lens on PBS
• Rotten Tomatoes
• Geneon Japan's Official Enron: The Smartest Guys in the Room sales site (Japanese)
• Magna Pacific/Dendy's Official Enron: The Smartest Guys in the Room Australia/New Zealand sales site
• Synopsis