Enron: The Smartest Guys in the Room (2005, 2007)

Enron: The Smartest Guys in the Room is a documentary film from 2005 that was released on DVD in 2007. Here is some basic information about it:

** Produced by Alex Gibney, Susan Motamed and Jason Kliot

** Written and directed by Alex Gibney

** Narrated by Peter Coyote

** Run time: 106 minutes

This film is the story of the rise and fall of the US company Enron, from the founding in 1985 until the sudden crash in October-November-December 2001. It is based on the book The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron by Bethany McLean and Peter Elkind (2003). Both authors appear in the film.

The company slogan says: “Ask why.” This slogan was supposed to create an environment in which the staff would ask: “Why is it this way? Why not in another way?” These questions were supposed to help them find ways in which the company could make more money.

Unfortunately, and ironically, no one ever asked why Enron was doing so well – or more precisely seemed to be doing so well – for so long, while other companies were in trouble. Was it because they were smart? Because they were lucky? Or was there a more sinister explanation? Could it be that a large part of their operations was based on fraud? Could it be that the high value of the Enron stock was never backed by real assets, but only existed on paper?

For several years, the leaders of Enron were able to make people on Wall Street, the US public, indeed the whole world, believe that Enron was a giant that was doing well. In reality, the company was a house of cards.

In theory, something like the Enron disaster cannot happen. There are safeguards in the economic system. They are there to prevent this from happening. Lawyers, accountants, and bankers are supposed to say no and issue a warning, if a company does something wrong. But in the case of Enron, the system did not work: the lawyers, the accountants, and the bankers worked with Enron, perhaps because they were offered a share of the profits.

Many witnesses are interviewed in the film. Some of them used to work for Enron, while others have studied the company from the outside. The list of names is too long to be mentioned here.

Top leaders of the company are profiled in the film:

** Ken Lay

** Jeff Skilling

** Lou Pai

** Andy Farstow

** J. Clifford Baxter

** Amanda Martin-Brock

** Sharron Watkins

The third person on this list (Lou Pai) left the company a few months before the crash. He left with more than 250 million dollars and he was never charged with any crime. The fifth person on this list (Clifford Baxter) left the company in May 2001 and committed suicide in January 2002. The other male leaders (Ken Lay, Jeff Skilling and Andy Farstow) were charged and later sentenced to several years in prison.

The female leaders (Amanda Martin-Brock and Sharron Watkins) were never charged with any crime, even though they were part of the leadership and they knew what was going on. They are both interviewed in the film.

When the company crashed, about two thousand people lost their jobs. Not only their monthly pay check but also their pension fund disappeared into the air.

The leaders of the accounting firm Arthur Andersen realised that they might be charged as well, so they ordered a systematic shredding of documents in order to cover their tracks. This did not help: the company was found guilty in 2002. While the conviction was reversed in 2005, this did not help much: nobody wanted to hire the company because of its bad reputation, and it was effectively wiped out.

[In 2014, the company tried to come back to life under a new name: Andersen Tax. For details, see “Arthur Andersen returns 12 years after Enron scandal,” the Telegraph, 2 September 2014.]

The fall of Enron in 2001 was a warning sign about what would happen seven years later, on a much larger scale. But the warning was taken not taken seriously. And when the economic crash came in 2008, most people were taken by surprise.

This film got some good reviews. On IMDb it has a rating of 77 per cent; on Metacritic it has a rating of 82 per cent; and on Rotten Tomatoes it has a rating of 97 per cent. In the Chicago Sun-Times, the famous movie critic Roger Ebert (1942-2013) gave it a rating of 3.5 out of 4. It won the Independent Spirit Award for Best Documentary Feature of 2005.

I understand the positive reviews and I agree with them. This is an important film about an important case. Therefore it is highly recommended.

PS # 1. For more details about Enron, see the following items:

** Enron: The Rise and Fall by Loren Fox (2002, 2003)

** Power Failure: The Rise & Fall of Enron by Mimi Swartz with Sharron Watkins (2003) (both authors are interviewed in the film)

** The Crooked E: The Unshredded Truth about Enron is a 2003 movie based on the book Enron: Anatomy of Greed by Brian Cruver (2003) (both book and film received mixed reviews)

PS # 2. Rogue Trader is a movie about Nick Leeson who caused the downfall of the Barings Bank in 1995. This movie that premiered in 1999 received mixed reviews: on IMDb it has a rating of 63 per cent, but on Rotten Tomatoes is has a rating of only 30 per cent, while the Telegraph gives it only 2 of 5 stars.

PS # 3. Mea Maxima Culpa: Silence in the House of God is another significant documentary film directed by Alex Gibney. It premiered in 2012 and was released on DVD in 2013.

***