The movie, which makes no pretense of being fair or balanced, relentlessly seeks to prove that such claims of ignorance are false.
#The smartest guys in the room full movie trial#
The question that will face Lay and Skilling when they are put on trial in 2006 is: How much did they know, and when did they know it? Both have already insisted, with earnest-looking faces and sad eyes, that they had NO IDEA their hirelings were engaged in such shady practices as faking an energy crisis in California in order to drive up electricity prices. Once it became apparent that Enron’s emperor was buck naked, its stock prices plummeted to what they were really worth - as low as a few nickels per share - and everyone who had invested in it lost everything. Enron’s staff of go-getter stock salesmen, the sort of alpha males depicted in the film “Boiler Room,” convinced hundreds of ordinary people to invest in the company, thus inflating Enron’s stock price to a value that was far greater than what the company was actually worth if one examined its actual assets. If you’re alarmed that Arthur Andersen signed off on this practice, you’re not alone: You may recall that things did not end well for Arthur Andersen, legally speaking.īut that’s not all. Under “mark to market” accounting, I declare a million dollars as my profit - even though, on the way home from your house, my car falls in the river and the Beanie Babies are lost forever.
In other words, I buy a thousand Beanie Babies from you for $10, knowing I can sell them on eBay for a total of $1,000,000. The company’s accounting firm, Arthur Andersen, let them use an arcane method of accounting known as “mark to market,” whereby a company declares its POTENTIAL profit as its ACTUAL profit, even if the deal in question winds up failing completely.
What Enron was doing, essentially, was cooking the books. Someone in the film observes that not only was Enron a house of cards, but the house of cards was “built over a pool of gasoline,” too. Even smart people took the even-smarter Jeffrey Skilling’s word for it that the company was profitable, too intimidated to ask the tough questions until it was too late. What the company counted on was the very thing that stymied observers like myself after the fact: No one really understood how Enron operated or how it made money. With Lay as its chairman and the devilishly shrewd Jeffrey Skilling as president, Enron’s stock price soared in the 1990s. He got his wish, of course, and Enron thrived. That is to say, he wanted electricity and natural gas to be bought and sold like any other commodities, with providers vying for customers and charging what the market will bear. Ken Lay’s father was a Baptist minister (“Son of a Preacher Man” plays on the soundtrack, one of several amusing uses of apropos pop music) and Ken himself was a strong-headed businessman who pushed for the deregulation of public utilities. Documentarian Alex Gibney wrote and directed it. It’s really a human tragedy.” McLean and Peter Elkind wrote the book on which the film is based, and they appear on-camera to explain what happened, aided by Peter Coyote’s slightly smug-sounding narration. It is, as Bethany McLean tells us, “a story about people. It may be that what Enron was up to was so byzantine, it CAN’T be dumbed-down. It’s been simplified, but not dumbed-down. Even the film’s audience-friendly method of analysis requires that you pay attention. “Enron: The Smartest Guys in the Room” boils it down and tells the story in clear terms, but make no mistake: It’s still a complex issue. I had never heard of Enron until the scandal broke, and even then I didn’t know what sort of business it was.
All I knew was that I was supposed to be outraged by it. I remember being discouraged by the Enron scandal specifically, not because I was angry at the criminality involved, but because I had no idea what, exactly, anyone had done wrong. Movies like “Enron: The Smartest Guys in the Room” are useful because they explain complicated issues in simple terms - a boon to us normal folks who are often frustrated by news coverage of ongoing stories that fails to take into account that we’re not all financiers or political scientists.
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