I saw “Enron: The Smartest Guys in the Room” on Thursday. An excellent film. The video footage captures the venality of the participants, particularly Skilling and Lay, far more effectively than the written word. I suspect that the DVD will not be in heavy rotation in the Lay and Skilling households. While there were a few political cheap shots in the film, none of them were egregious enough to trigger my gag reflex.
One significant failing of the film is that it lets the SEC off the hook. Enron and Skilling first approached the SEC about switching to “mark-to-market” accounting in June 1991, and then spent six months lobbying the agency until it finally agreed in January 1992 to let Enron make the switch. The SEC told Enron that it could make the change effective for the year beginning January 1, 1992. Enron pushed back and informed the SEC that they were going to make the change effective for the year 1991. They told the agency that the change would not be “material” for the year. The SEC gave in. According to McLean and Elkind, Enron’s reported earnings of $242 million for 1991 included approximately $25 million from the accounting change. In my book, that is material.
The switch to mark-to-market was Skilling’s idea. While Andersen’s national office in Chicago signed off on the methodology, it did so over the objections of its Houston office. Jeff Skilling was the one who made the September 1991 presentation to the SEC in their Washington offices. Skilling is going to have a hard time convincing a jury that he was not a hands-on executive.
As for the SEC’s reviews of Enron’s subsequent filings, that speaks for itself.
Michael Wilmington, who would be a national figure if he didn’t toil in the same city as Roger Ebert, has written what I consider to be a fairly accurate review of the film:
Movie review: "Enron: The Smartest Guys in the Room"
By Michael Wilmington
Tribune movie critic
April 28 2005
3½ stars (out of 4)
Even if the financial pages bore you—even if you've never watched Lou Dobbs or Neil Cavuto and never will—"Enron: The Smartest Guys in the Room" should hold you spellbound.
Alex Gibney's documentary on the collapse of the high-flying Houston energy company is a powerhouse: a non-fiction movie that pulls a motherlode of high drama and dark comedy out of one of the decade's most fascinating news stories.
At its best, it's a thriller that makes John Grisham's paranoiac concoctions seem almost tame. Based on the book of the same name by Fortune Magazine reporters Peter Elkind and Bethany McLean, with both journalists as frequent on-camera interviewees, it's an exhaustive but engrossing account of the incredible rise and fall of Enron—and of top bosses Ken Lay, Jeff Skilling and their double-dealing executives, duplicitous accountants, rapacious traders and hapless employees, all of whom became enmeshed in what now looks like the biggest corporate crime in American history.
In damning detail, with laser-sharp lucidity and razor-keen humor, "Enron" describes how an initially modest Texas gas pipeline combine, born from a merger of Houston and Omaha natural gas companies in 1985, grew into a vast corporation with (allegedly) billions in profits, huge stock sales, numerous subsidiaries, ambitious projects all over the world (from California to Afghanistan) and a media-fed reputation as America's most innovative, forward-looking company.
As if all that weren't enough, Enron had super-clout as well: intimate ties with the Bush administration (to which it contributed Secretary of the Navy Tom White), plus enough power to bring California to its knees and bleed it white during the 2000-2001 energy crisis—before Enron itself collapsed in a chaos of frantic executive stock selloffs, resignations, suicide, prosecutions, mass layoffs, plummeting stock prices, a Chapter 11 bankruptcy, disgrace and high-profile criminal indictments.
At the center of this storm are two amazing characters: one-time Enron president and chief operating officer Jeff Skilling (brother of Tribune Co.'s renowned WGN-Ch. 9 meteorologist Tom Skilling) and chairman and chief executive officer Ken Lay, the man called "Kenny Boy" by his longtime pal and political beneficiary, President George W. Bush.
Lay, who was there from the start, and Skilling, who joined Enron in 1990, are under indictment and declined to be interviewed for this movie, on their lawyers' counsel. But they're on screen plenty anyway, in TV news reports, taped congressional hearings and on Enron's own slick promotional films and goofy in-house comedy skits.
Both emerge as compelling, contradictory figures: Lay, the preacher's son who rose to the heights by preaching the gospel of market values, and Skilling, the one-time brainy nerd turned macho executive and prophet of hard-boiled business. They're also such ordinary-appearing guys. Lay looks a bit like a fatherly local real-estate salesman who always has a pat for your back, Skilling (described by Gibney as a "Jay Gatsby"-like figure) like the local chamber of commerce mover and wannabe shark.
How did these two—and an oddball raft of supporting characters, including Skilling's right-hand guy Lou Pai, a devoted fan of Houston's striptease scene—manage to jimmy the system for millions?
On the evidence here, the whole company seems to have been a big show: a vast chimera, built by the end on dubious laws and outright fraud and deception. If "Ask Why" was the company's official motto, "Money Talks" and "The Hell with Ethics" seems to be the secret ones.
The movie proffers two key factors in the company's demise: first, the adoption of "mark-to-market" accounting, a policy used by Enron's executives and accountants (the since-collapsed Chicago-based Arthur Andersen firm) to claim profits that never existed on the basis of the deals that were supposed to eventually produce them.
The second was the creation by Enron chief financial officer Andrew Fastow of innumerable mythical companies to hide all their actual losses from investor scrutiny.
But there's lots more, climaxed by the fleecing of Enron's own employees, who were encouraged to keep their eventually worthless stock while top dogs like Skilling and Lay sold theirs for millions. Most infuriating of all, and most illustrative of the culture of greed that consumed Enron's elite, are the phone tapes we hear of juvenile-sounding Enron traders making coarse, stupid jokes about the mess they've made of California's power supply and the fortune they're reaping from it. "Burn, baby, burn!" one giggles as forest fires threaten the state's power plants.
There are some more inspiring tales of company whistle-blowers. But by the end of "Enron," we've gotten a crash course in how to hoodwink the stock market, traduce accounting firms, deceive and bilk your investors and your own employees and bollix up state and federal systems while deluging elected officials with campaign contributions.
Reporters Elkind and McLean have uncovered and organized all the appalling facts, and Gibney—producer of Martin Scorsese's excellent blues documentary series and the Antoine Fuqua concert movie "Lightning in a Bottle"—has presented them with Michael Moore-style humor and showmanship.
That fits. Showmanship seems to be what Enron was all about. The Enron execs we see here are ballyhoo boys and hucksters, so skilled at manipulating appearances, milking political connections and snow-jobbing media opinion that they might be operating to this day—if they hadn't been such lousy businessmen.
So the movie does more than entertain and enlighten you. At the end, you also realize you've been watching a classic American tale, one that we can only hope will never be repeated—though it well might be.
mwilmington@tribune.com
"Enron: The Smartest Guys in the Room"
Directed and written by Alex Gibney; based on the book by Bethany McLean and Peter Elkind; photographed by Maryse Alberti; edited by Alison Elwood; music by Matt Hauser; executive producers, Mark Cuban, Todd Wagner, Joana Vicente; produced by Alex Gibney, Jason Kliot, Susan Motamed. Narrator: Peter Coyote. A Magnolia Pictures release; opens Friday. Running time: 1:53. No MPAA rating. Adult (language).
Copyright © 2005, The Chicago Tribune
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