Wednesday, August 22, 2007

Enron: The Smartest Guys in the Room (2004)

Alex Gibney, who wrote and produced Eugene Jarecki's The Trials of Henry Kissinger, examines the rise and fall of an infamous corporate juggernaut in Enron: The Smartest Guys in the Room, which he wrote and directed. The film, based on the book by Fortune Magazine reporters Bethany McLean and Peter Elkind, opens with a reenactment of the suicide of Enron executive Cliff Baxter, then travels back in time, describing Enron chairman Kenneth Lay's humble beginnings as the son of a preacher, his ascent in the corporate world as an "apostle of deregulation," his fortuitous friendship with the Bush family, and the development of his business strategies in natural gas futures. The film points out that the culture of financial malfeasance at Enron was evident as far back as 1987, when Lay apparently encouraged the outrageous risk taking and profit skimming of two oil traders in Enron's Valhalla office because they were bringing a lot of money into the company. But it wasn't until eventual CEO Jeff Skilling arrived at Enron that the company's "aggressive accounting" philosophy truly took hold. The Smartest Guys in the Room explores the lengths to which the company went in order to appear incredibly profitable. Their win-at-all-costs strategy included suborning financial analysts with huge contracts for their firms, hiding debts by essentially having the company loan money to itself, and using California's deregulation of the electricity market to manipulate the state's energy supply. Gibney's film reveals how Lay, Skilling, and other execs managed to keep their riches, while thousands of lower-level employees saw their loyalty repaid with the loss of their jobs and their retirement funds. The filmmaker posits the Enron scandal not as an anomaly, but as a natural outgrowth of free-market capitalism. ~ Josh Ralske, All Movie Guide

Running Time: 110 mins
Enron: The Smartest Guys in the Room (2004)

In the bonus materials there is an interview with Bethany McLean that was informative and presented an interesting background of a couple of the top people and how their background created their personas of greatness since they had overcome a lot to get to that level anyway. She also was one of the best parts of the film for her clearly stated answers while not stating hyperbole.

This movie confirmed to me that Gray Davis was weak and ineffective as Governor. He did deserve to lose the election. Even if he did not follow his advisers on sending in troops, he should have negotiated without dealing with the Scorpion. Nothing prevented him from having their own traders on the markets.

Peter Elkind again in the bonus material does make an important point that anyone with desire and motivation to look at the financial statements could have seen that something was wrong with the books. I know that some quant models also never rated Enron a Buy rating.

At a retail location I worked at, I did work under a Manager that thought that it should be standard practice to lose the bottom 10% of the work force every year. Just cut off the bottom 10% and work to get rid of them. I thought this was just crazy. It would be better to not destroy morale by looking to fire people, instead it is better to devote your attention to promoting and encouraging the winners. The losers will leave on their own accord in most cases anyway. Even just asking some people to do their work as required sent them to quiting.

The cartoons/skits on Enron in the bonus material was also a nice touch.

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