Review of Enron: The Smartest Guys in the Room (2005) by Josh S — 19 Jan 2006

Enron: The Smartest Guys in the Room.

The fall of Enron was always something that intrigued me, but also something I never really looked into discovering what it was all about. I?d seen all the news segments and even the occasional joke on The Simpsons or Conan O?Brien. I also saw the Houston Astros casually change the name of their stadium from Enron Field to Minute Maid Park. But with the exception of understanding that one of the largest American companies went from prominence to bankruptcy almost overnight, I never knew what exactly happened or what went wrong. This was my basic reason for renting the documentary, [i]Enron: The Smartest Guys in the Room[/i] this past week. I read nothing but good things about it, and fortunately enough the film lived up to its billing.

The documentary, which cleverly splices live footage of the Congressional hearings, in-company meetings, press conferences, interviews, and home video footage, molds together not just a story of greed and corruption, but also brilliance. These guys really were the smartest guys in the room. They were able to convince not just the public, but also investment banks and stock analysts that they ran a company that put the rest of the energy companies in the world to shame by posting growing profits year after year, and pushing their stock price close to 100, when typically a good value for an energy company was 30 or 40.

The documentary by director Alex Gibney, based on the book of the same name, does a wonderful job of letting us know about the men who were able to pull of this charade for to many years. The focus is on a group of men that really believed themselves to be ?risk-takers.? The image of Enron, skillfully molded by CEO Jeff Skilling, was that of a company that would take chances where no one else dared. These chances allowed Enron to prosper where others failed, or to grow while their competition remained stagnant. Enron did business with India, they took on optimistic endeavors like de-regulating power pioneering the open market for energy ? much like the Stock Exchange. Their risky business model propelled them to the forefront of nearly every business magazine with stories of how they were so successful and so ahead of the game.

The better part of the documentary comes next, and this is the explanation of the downfall; the stuff that makes this such a great story. Gibney portrays Enron to be kind of like Major League Baseball in the mid 90s, during the ?juiced ball? era, when fans and ownership took a blind eye, much in the same way that stockholders and the investment companies that sold Enron ignored the ?too good to be true? performance of Enron. But then, just as historic records began to fall, the U.S. economy began to slide into a recession, and when things are going bad is when questions start to be asked. How was Enron?s growth possible? Why were they so secretive about their business strategies? Who were these guys that made this all possible? And the one that cries conspiracy, how did they convince all their accounting firm, Arthur Anderson, to sign off on ?mark to market? accounting? To explain this ?mark to market? accounting allowed Enron to project future profits for business ventures, and assume them on the balance sheet whether or not those projections were accurate. So even if a venture made no money but they projected profits of $50 million that year, they could still claim the $50 million in their profits at the end of the quarter. Here is where the stock inflation got most of its gas. The downfall was inevitable at this point and the documentary identifies greed and corruption as the main driving forces. Businessmen men who were seen as risky for taking on risky endeavors were really just taking on the risks of committing white-collar crimes.

The real tragedy comes in the later part of the documentary where details of lost pensions, lost retirement plans, and lost jobs surfaces. The bankruptcy of Enron burned many investors and forced some out of retirement, or pushed others retirement plans back for many years. This was the real crime.

To wrap up I must say the biggest achievement of the film was the fact that Gibney kept the Bush administration and any political agenda to a minimum. I mean sure, you have to mention something when Enron was the Bush campaign?s largest company supporter, but to refrain from the Michael Moore conspiracy route gives the film a lot more credibility. Here the facts speak for themselves. So while the documentary can be a little too much at once, and focuses more on the people involved than the ways they tricked the world, it still is a rewarding watch full of fascinating information.