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Film Review

Enron: The Smartest Guys in the Room

(May 8, 2005) Hi, Enron has already become a eponym for greed and corruption, with much published about this corporate crime of the century. The chain of events and characters is so complex, that short of reading the book by the same name, it is almost impossible to fully understand their scale, and the effects of Enron's collapse. It is a very complicated story, but director Alex Gibney (Crimes of Henry Kissinger) turns this into a riveting tale. He uses Bethany McLean and Peter Elkind's (Fortune Magazine writers) book, adds much footage of older interviews with the principal villains and congressional hearings, coupled with interviews with other players, some heroes, like the Enron accountant who discovered that the books were being cooked and was willing to confront management, and ultimately testify before Congress. We can be sure that if Enron had survived, she would have been fired (or worse).

Gibney focuses on the four principal villains: Kenneth Lay (Chairman), Jeffrey Skilling (CEO), Andy Fastow (CFO), and Lew Pi (the stripper-smitten exec who cashed out well ahead of the collapse and bought a big piece of Hawaii). Taking advantage of aggressive deregulation, Enron began booking profits on deals that had just been signed, long before any actual profits appeared. In most cases, there were no profits. Fastow created entities that served to pass Enron debt to third parties, all aided by the huge amounts of cash that the various banks were eager to loan Enron. There were no lack of accessories to these crimes: Vinson & Elkins (Enron's white shoe law firm) and Arthur Andersen, which itself finally collapsed as a consequence. And financial analysts and journalists. For years they had been writing glowing reports of Enron and its seemingly genius leaders, creating unfailing profits, but without anyone really understanding how. What did Enron do actually? No one could answer the question until a Fortune reporter, Bethany McLean, wrote a mild but insightful article questioning the source of their profits. For this, she was vilified and harassed by Skilling himself. But it was the beginning of the unraveling. The price of Enron stock is shown at the bottom of the screen, like a ticker tape, for the entire film, from its rapid ascent to its crash.

Then there was the California energy crisis, which ended up costing the state literally tens of billions of dollars and caused PG&E to file for bankruptcy. Although few people believed it then, this was caused by Enron's manipulation of power plants and distribution lines. Gibney plays tapes of Enron's traders joking about how much money they were getting out of California, and tapes with the same traders telling plant operators to shut down or cut back energy production to create a shortage. There is an interview with Gray Davis, who now seems sympathetic. Those who claimed there was a conspiracy were correct. This ten minute segment on the energy crisis is worth the entire film itself.

Gibney gives us footage and quotes, showing both Bush administrations' strong ties to Enron. Enron was the largest single corporate contributor to Bush in 2000. It shows how key regulators who were particularly friendly with Enron were appointed by W, but the film is not principally a Bush bashing affair. The greed, arrogance, and complete lack of morality in Enron's senior management is shown again and again. We have Skilling telling employees to invest in Enron stock, while he is selling his own, knowing that the company was doomed. One commentator says that Enron management was like the captain of a sinking ship, lowering himself into the lifeboats, while reassuring the passengers that all is well. Over 20,000 employees lost their jobs and their pensions, which were principally in Enron stock. The interviews with these employees are heart rending. This is juxtaposed with Lay saying he really didn't understand the operation, and left it all to Skilling. There is a reenactment of the suicide of a senior executive, which seemed unnecessary.

The only shortcoming in this film, in my opinion, is the failure to also focus on the board of directors, who either knew or should have known. Suddenly Enron collapses, and everyone on the board claims ignorance. Clearly the major players need to spend a long long time in jail, but the board's unwillingness to pay attention is criminal as well. Everyone who made real money from Enron was blind, or didn't want to see the corruption. Perhaps the director felt this would make the film too long. There is a wonderful piece of footage showing Alan Greenspan being given an award by Enron.

This film is absolutely compelling, and doesn't have a slow moment. The musical accompaniment is fantastic: pop songs like God is on Vacation, Billie Holiday songs, music by Philip Glass, and much more. There is a lot of sarcasm and black humor here, not in Michael Moore's style, but skillfully done, and understated. The film is entertaining, but no one will leave without feeling sadness and a great deal of anger. Alex Gibney has made a great and important film that needs to be seen. Interestingly, the owners of the Landmark Theater chain, 2929 Entertainment, are listed as producers, and probably help fund the film. They have done a good thing! Playing on two screens at the Embarcadero.

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