Saturday, June 03, 2006

Enron: The Smartest Guys in the Room

I'll make my first review here one that is timely, given the recent convictions of Enron execs Lay and Skilling, may they rot in hell.

Voltaire famously said that while he himself had lost his religion, he hoped that his butcher was a Christian. The assumption is that a religious man would be more honest in his dealings. I have always found, however, that there are just as many scoundrels on church pews as there are sleeping in on Sunday mornings. For those who doubt it, “Enron: The Smartest Guys in the Room” is a great introduction to the kind of rationalization that allows supposedly morally upright, Christian Conservative types to lie, cheat, and steal while maintaining the bland smile of a Baptist minister.

Unless you spent the last few years under a rock, you are at least vaguely aware of the Enron scandal. Ken Lay, an Enron top executive, lobbied hard in Washington and in the states for deregulation of energy companies. Once that deregulation occurred, Enron set out to make billions buying and selling energy futures, under the leadership of CEO Jeff Skilling. By posting record profits each quarter, Enron drove Wall Street traders into a frenzy, and their stock price doubled repeatedly. The company was a darling of conservatives, particularly Ken Lay’s good friend, George W. Bush. Then, very rapidly, it all came crashing down, as reporters and investors started asking questions that the company couldn’t answer. It came to light that those record profits were just based on projections, many of which never panned out. What’s worse, in order to hide their losses, Enron created dummy corporations under executive Andrew Fastow to which they sold worthless property to shore up their bottom line. Remarkably, they did this with the complicity of the world’s largest banks and Arthur Anderson, America’s oldest accounting firm. As the lies inevitably unraveled and Enron stock plummeted, Enron executives froze the employee retirement accounts so that employees couldn’t sell their Enron stock. Meanwhile, Jeff Skilling and Ken Lay unloaded their own stock for hundreds of millions of dollars. Finally Enron declared bankruptcy, leaving 20,000 people unemployed, with their retirement savings wiped out.

“Enron: The Smartest Guys in the Room” is Alex Gibney’s crisp, riveting documentary about how Enron fooled all of the people for some of the time. Based on a book by reporters Bethany McLean and Peter Elkind, the film graphically depicts the greed and hypocrisy on which the company ran. The film is rated R for nudity (one of the Enron execs frequented strip bars), language, and one violent scene, but the part I really wouldn’t want a child to see is the recorded phone calls in which Enron traders laugh about shutting down power plants in order to manufacture the California energy crisis and raise electricity prices. The part that disgusted me the most, though, is the way Ken Lay and Jeff Skilling cloak themselves in the image of Christian, clean-cut, white-knights while committing fraud on a scale that is downright evil. These guys epitomize what is wrong with the so-called Neo-Conservative movement. Having said that, I am not a liberal, and this is not just a liberal film. Where “The Smartest Guys in the Room” delves into politics, it is mostly because the Enron story itself is rife with political connections. From energy deregulation to the Bush family connection to the Governor Gray Davis recall in California, the Enron story is in many ways a political story. Unfortunately, this is a story in which all the villains happen to be conservative Republicans. Other than taking a few shots at Arnold Schwarzenegger, however, the film is pretty even-handed about the politics; much more even-handed than this review!

With “Enron,” Alex Gibney has managed to take the potentially bone-dry subject of financial fraud and make a riveting tale. I was on the edge of my seat for this one! With the recent convictions of Ken Lay and Jeff Skilling, this is the perfect time to watch it.

4.5 stars out of 5.

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