Enron: The Smartest Guys in the Room 2005
Everyone knows that Enron committed fraud and cost its employees their jobs and pensions. But the story is more convoluted than one newspaper or magazine article can describe. The filmmakers of this documentary had to be very careful. The Enron debacle was an accounting crime and nobody will watch a movie about accounting. So they skip a lot of the accounting and show you the people who kept Enron on the verge of collapse for several years before the entire house of cards fell in. Most of the movie consists of interviews with people about Enron, but really none of the key players who are all fighting legal battles and would never give you a straight answer anyway. And there is no way to describe everything that Enron did wrong. Having watched the movie I still do not understand how Enron was able to lose millions of dollars every year and show that they made a profit. They act like someone should have just asked a few questions and it would have been revealed, but I can’t believe it was that simple.
When I picked up the movie I thought it was odd that it would have an R rating. I wasn’t sure if a few expletives could cause that kind of rating. However, when they talk about an executive who liked to visit strip bars, they show a strip bar. Thus the R rating. I thought it was an odd choice for a movie about accounting fraud.
Certainly the beginning of it all was when Enron was approved to use “mark to market” accounting, which gave them free rein to manipulate balance sheets by including speculative future gains on paper as actual income. The filmmakers are very savvy here. Instead of blaming poor government regulation they stick to telling a story of people up to no good. Though there is some use of Enron’s close ties to the Bush family, they don’t try to make points they can’t support like a Michael Moore would.
There are great small lessons to be learned. Early on, Enron was able to make money by creating a small power crisis in California that they were able to exploit into a $7 million gain. Even though they were investigated for this, the fine for the manipulation was only $25,000. Later Enron would steal $30 billion from Californians in artificially high energy price.
Gray Davis was recalled as governor and replaced by a republican, a great irony since the republicans were the ones behind the deregulation that Enron asked for and was able to exploit. Meanwhile the executives at Enron pointed the finger at the remaining regulations as the reason for the market imbalance when the imbalance was in fact created by them.
Anyway, even though it certainly doesn’t answer all of my questions and won’t leave you an expert on Enron, this is a great start that gets to the heart of the Enron collapse. I’ll give it an A.
Written: 12 Jun 2006
Owned on: Digital