Enron: The Smartest Guys in the Room

[edotherocket 0]

BY ROGER EBERT /  April 28, 2005

 

 

 

Cast & Credits

Featuring: Kenneth Lay, Jeff Skilling, Lou Pai, Mike Muckleroy, Sherron Watkins, Red. James Nuter, Bethany McLean and Peter Elkind and others. Narrated by Peter Coyote.

 

Magnolia Pictures presents a documentary directed and written by Alex Gibney. Based on the book, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, by Bethany McLean and Peter Elkind. Running time: 110 minutes. No MPAA rating.

 

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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. It tells the story of how Enron rose to become the seventh largest corporation in America with what was essentially a Ponzi scheme, and in its last days looted the retirement funds of its employees to buy a little more time.

 

There is a general impression that Enron was a good corporation that went bad. The movie argues that it was a con game almost from the start. It was "the best energy company in the world," according to its top executives Kenneth Lay and Jeffrey Skilling. At the time they made that claim, they must have known that the company was bankrupt, had been worthless for years, had inflated its profits and concealed its losses through bookkeeping practices so corrupt that the venerable Arthur Anderson accounting firm was destroyed in the aftermath.

 

The film shows how it happened. To keep its stock price climbing, Enron created good quarterly returns out of thin air. One accounting tactic was called "mark to market," which meant if Enron began a venture that might make $50 million 10 years from now, it could claim the $50 million as current income. In an astonishing in-house video made for employees, Skilling stars in a skit that satirizes "HFV" accounting, which he explains stands for "Hypothetical Future Value." Little did employees suspect that was more or less what the company was counting on.

 

Skilling and Lay were less than circumspect at times. When a New York market analyst questions Enron's profit and loss statements during a conference call, Skilling can't answer and calls him an "a-hole;" that causes bad buzz on the street. During a Q&A session with employees, Lay actually reads this question from the floor: "Are you on crack? If you are that might explain a lot of things. If you aren't, maybe you should be."

 

One Enron tactic was to create phony offshore corporate shells and move their losses to those companies, which were off the books. We're shown a schematic diagram tracing the movement of debt to such Enron entities. Two of the companies are named "M. Smart" and "M. Yass." These "companies" were named with a reckless hubris: One stood for "Maxwell Smart" and the other one ... well, take out the period and put a space between "y" and "a."

 

What did Enron buy and sell, actually? Electricity? Natural gas? It was hard to say. The corporation basically created a market in energy, gambled in it and manipulated it. It moved on into other futures markets, even seriously considering "trading weather." At one point, we learn, its gambling traders lost the entire company in bad trades, and covered their losses by hiding the news and producing phony profit reports that drove the share price even higher. In hindsight, Enron was a corporation devoted to maintaining a high share price at any cost. That was its real product.

 

The documentary is based on the best-selling book of the same title, co-written by Fortune magazine's Bethany McLean and Peter Elkind. It is assembled out of a wealth of documentary and video footage, narrated by Peter Coyote, from testimony at congressional hearings, and from interviews with such figures as disillusioned Enron exec Mike Muckleroy and whistle-blower Sherron Watkins. It is best when it sticks to fact, shakier when it goes for visual effects and heavy irony.

 

It was McLean who started the house of cards tumbling down with an innocent question about Enron's quarterly statements, which did not ever seem to add up. The movie uses in-house video made by Enron itself to show Lay and Skilling optimistically addressing employees and shareholders at a time when Skilling in particular was coming apart at the seams. Toward the end, he sells $200 million in his own Enron stock while encouraging Enron employees to invest their 401K retirement plans in the company. Then he suddenly resigns, but not quickly enough to escape Enron's collapse not long after. Televised taking the perp walk in handcuffs, both he and Lay face criminal trials in Texas.

 

The most shocking material in the film involves the fact that Enron cynically and knowingly created the phony California energy crisis. There was never a shortage of power in California. Using tape recordings of Enron traders on the phone with California power plants, the film chillingly overhears them asking plant managers to "get a little creative" in shutting down plants for "repairs." Between 30 percent and 50 percent of California's energy industry was shut down by Enron a great deal of the time, and up to 76 percent at one point, as the company drove the price of electricity higher by nine times.

 

We hear Enron traders laughing about "Grandma Millie," a hypothetical victim of the rolling blackouts, and boasting about the millions they made for Enron. As the company goes belly up, 20,000 employees are fired. Their pensions are gone, their stock worthless. The usual widows and orphans are victimized. A power company lineman in Portland, who worked for the same utility all his life, observes that his retirement fund was worth $248,000 before Enron bought the utility and looted it, investing its retirement funds in Enron stock. Now, he says, his retirement fund is worth about $1,200.

 

Strange, that there has not been more anger over the Enron scandals. The cost was incalculable, not only in lives lost during the power crisis, but in treasure: The state of California is suing for $6 billion in refunds for energy overcharges collected during the phony crisis. If the crisis had been created by Al Qaeda, if terrorists had shut down half of California's power plants, consider how we would regard these same events. Yet the crisis, made possible because of deregulation engineered by Enron's lobbyists, is still being blamed on "too much regulation." If there was ever a corporation that needed more regulation, that corporation was Enron.

 

Early in the film, there's a striking image. We see a vast empty room, with rows of what look like abandoned lunchroom tables. Then we see the room when it was Enron's main trading floor, with countless computer monitors on the tables and hundreds of traders on the phones. Two vast staircases sweep up from either side of the trading floor to the aeries of Lay and Skilling, whose palatial offices overlook the traders. They look like the Stairway to Heaven in that old David Niven movie, but at the end they only led down, down, down.

 

It's really sad and all but I burst into laughter at these guys making a shell company called My Ass. I wonder if they kept going, they would have gotten around to making DEYTOOKURJAWBS Inc.?

 

What was actually the fallout from the whole Enron thing? Did it get pinned on any one person?

[kkktookmybabyaway 0]

Wonder if a movie about America's biggest Ponzi scheme -- Social Security -- is going to be made. Wait, this isn't CE. Nevermind.

 

So is this some hippie film that will only be seen in NY and LA, or will this have a bigger release?...

[MDH257 0]

Wonder if a movie about America's biggest Ponzi scheme -- Social Security -- is going to be made. Wait, this isn't CE. Nevermind.

 

So is this some hippie film that will only be seen in NY and LA, or will this have a bigger release?...

Managing to seem interested in the film and dismissive of it in the same breath is quite a trick. Makes me glad I stay away from the CE forum.

 

The film is playing here in Houston, the home of Enron. I'm sure it'll make it to the larger cites. If anyone has HD, it aired on HDNet for some reason.

[kkktookmybabyaway 0]

Oh stop by for a visit, hippie. You know you want to.

 

For the record, I don't care about this film, and I usually respond to a thread/post with the first thought that pops into my mind.

 

For shits and giggles, they ought to provide a screening at what used to be Enron Field.

 

See what I mean about just typing what pops into my head at any given moment?

 

Mmmm, Eliza Dushku...

[MarvinisaLunatic 0]

I saw this on HD Net last weekend as a part of its dual premiere (since its the first movie from HDNet Studios or whatever).

 

I was pretty shocked at a lot of the stuff.

[kkktookmybabyaway 0]

About what? Rich white men trying to get away with white-collar crimes? Yeah, that never happens.

 

And unless I've been tuning out big time, I don't think Ken Lay has gone to trial yet...

[Guest MikeSC]

But what about the VICTIMS?!?

 

You know, the employees who made a killing off the stocks and then couldn't pawn them off suckers in the stock market before the stock crashed and then saw their stocks drop to levels that are only slightly above the value of Social Security.

-=Mike

...The book "Conspiracy of Fools" is excellent. This movie, most likely, won't be...

[Special K 0]

Man, it cost a LOT of people a LOT of money. One of the major reasons my company's so far in debt.

[NoCalMike 0]

The movie opens here today in Sacramento. I think the main objective of the movie is to try and disspell any conensus that Enron was somehow a "wonderful company.....gone bad" and that it was rotten to the core way before financial troubles began. Well at least that is what the local reviewer implies. I think I might see this sometime in the next week or so.

[kkktookmybabyaway 0]

Well I'm not paying $7 to some hippie filmmaker to learn that big corporations aren't like romper room...

[MarvinisaLunatic 0]

Well I'm not paying $7 to some hippie filmmaker to learn that big corporations aren't like romper room...

I wouldnt have paid $8 to see it in theatres either (and I doubt the local theatre will play it anyway) but it was on free last weekend on HDNet so I watched it.

[Ted the Poster 0]

From a review at rottentomatoes.com: "Gibney, however, is no Michael Moore -- he knows the difference between hard facts and circumstantial evidence, constructing very different arguments with each."

-- Wade Major, BOXOFFICE MAGAZINE

 

Any truth to that?

[Jorge Gorgeous 0]

But what about the VICTIMS?!?

 

You know, the employees who made a killing off the stocks and then couldn't pawn them off suckers in the stock market before the stock crashed and then saw their stocks drop to levels that are only slightly above the value of Social Security.

-=Mike

...The book "Conspiracy of Fools" is excellent. This movie, most likely, won't be...

What about the people who never worked there who had their retirement funds invested in Enron, you giant douche?

[Art Sandusky 0]

Chill out, people. It's just a friggin' Enron documentary.

[kkktookmybabyaway 0]

CE's leaking out to other folders. Awesome...

[Skywarp! 0]

I saw this last night and it is an excellent film. I think everyone should see it. It's amazing how far the scandal stretches.

 

True, unlike Moore films, this movie offers hard facts without sensational leaps in logic. This movie still SHOCKS, but again, unlike Moore, it does so because what's going on is unbelievably true.

 

It is such and interesting (and infuriating) movie.