Enron: The Smartest Guys in the Room

Yesterday, I reviewed the new Nicholas Cage movie about gunrunning, Lord of War, and I complained that the movie followed an all-too-predictable path, laid out in films like Scarface, Blow, Goodfellas and Layer Cake. After seeing this documentary film, based on the true story of the collapse of the massively-fraudulent Enron Corporation, I'm starting to think this criticism is unfair.

I mean, Lord of War is still a bad movie. But it's predictable and formulaic because these stories tend to unfold in the same way. Capitalism drives particularly shrewd and calculating individuals to devise new ways to cheat the system. These individuals invariably develop a sense of superiority, of ominpotence, and push the scheme just a bit too far, bringing about a swift and humiliating downfall.

So, you might say that Enron: The Smartest Guys in the Room is old-fashioned, Rags-to-Riches-to-Rags filmmaking. It might be really entertaining if it weren't so horrifying, sad and true.



Those two handsome devils are Enron Chairman Kenny Boy Lay and his First Mate, Enron CEO Jeff Skilling. Kenny Boy, who lobbied Washington for years in favor of energy deregulation, finally got his way with the aid of a certain influential family...What is their name...Hmm...Powerful American family deeply ingrained in not only the political establishment, but also the intelligence community and the Energy Industry...Texans...Partial to giving people stupid nicknames...Can't seem to place it right now. Anyway, it'll come to me.

With energy deregulated, Kenny Boy searched around for the best possible way to make a dollar and a cent off of the newly-free energy market. And that's when he met Uber-Nerd Jeff Skilling, a man with a plan.

The great thing about watching Enron: The Smartest Guys in the Room is that it fills in all the gaps in common understanding about the scandal. I knew the Big Picture concept - Enron had falsified earnings to boost stock performance and manipulated the California energy market, bilking yours truly and other California taxpayers and energy consumers to the tune of $36 billion and causing obnoxious rolling blackouts. Then, when the company's demise was imminent, the crooked upper management types sold off their shares, leaving the regular employees relying on the stock for their retirement twisting in the wind.

I thought that the details of exactly how Enron managed to pull this off would be highly complicated, and require a nuanced understanding of accounting procedure and the inner workings of the energy market.

As director Alex Gibney's compelling, fascinating documentary (based on a book by reporters Bethany McLean and Peter Elkind) makes clear, this really isn't the case. Skilling's idea was actually pretty simple. Rather than actually worrying about the transport and storage of energy, Enron would just buy energy resources and then resell them to whoever was buying, acting as a sort of way-station or middle-man. And to sweeten the deal, Enron managed to convince the government to let them record and report their own earnings, in some cases based on deals they had made to provide energy 10 years down the road.

This would be like me saying, "I'm going to buy a new car tomorrow, and I'll sell it to you in 5 years for $2,000," and you agreeing. Then, tonight, I'm ordering a pizza with a friend and they ask if I have any money. "Sure," I reply. "I have $2,000. You just can't see it. But go ahead and order the pizza." Then he does, and when it arrives, I punch the pizza man in the face, grab a slice and take the fuck off at top speed.

Once that was in place, the scam was exceedingly simple. You just steal whatever you can whenever you can, and if someone comes around asking about what you're doing, you bribe them. This is where the remarkable similarities to fictional films like Lord of War come in. Just as in the arms trade, or the drug trade, or any other kind of illegal activity, spreading your earnings around is the surest way to guarantee you won't get caught. In this case, investment banks, traders and analysts, those involved in government oversight and power station employees went along with the illegitimate deals and got their palms greased.

The film is designed in some ways to piss you off, and it succeeds at this magnificently. Much attention is paid to the in-house recordings of employees gleefully discussing the extent to which they are screwing over consumers. In addition to the now-infamous tape in which a trader laughs hysterically about shutting off a grandmother's heat during the cold winter months, there is disgusting video footage of Skilling entreating employees to invest more heavily in Enron stock after he knew the end was near, and had started feverishly selling off his own shares.

In some of the film's most revealing and insightful moments, Gibney attempts to explore the psychology of Skilling, the man who really served as the "architect of Enron." A variety of theories are offered into how, exactly, a seemingly normal man could allow himself to sink so low in the name of greed and power. Was it the hubris that seems to always go along with great genius? Was he simply a man who had been bullied all his life, who desperately wanted to enjoy the chance to bully others? (This theory is backed up by tales of Enron executives taking manly adventure vacations together, which to me sounds a bit more repressed-gay than repressed-nerd.) Or was he just a sick guy, born without the ability to discern right from wrong?

Skilling comes off far more human, at least, than his cohort Ken Lay. At least, at the end, after his pal Cliff has committed suicide in shame and the company he took so much pride in has declared bankruptcy, Jeffy looks upset. Kenny Boy seems incapable of mustering up any emotion at all, aside from enthusiasm about his stock portfolio.

Long after it's become obvious even to the low-level employees that Enron is going under, Ken continues to meet with stockholders and give speeches about how the future looks bright. At one point, he takes written questions from his audience.

"Are you on crack?" one of the questions reads. "If so, this would all make more sense."

And he kind of chuckles at the joke. He doesn't really seem upset at all, even when they're walking him away in handcuffs. Is it because he knows he has his Golden Parachute, enough money to last 3 lifetimes? Or is it that he knows his best buddy in Washington (whose name is still eluding me...) is watching his back?

The problems that led to the Enron crisis are, it seems to me, the same that persist in American government today. Certain individuals have found a way to monopolize all the power, and are using it to dismantle the system of checks and balances that allows America to run properly. In this case, Ken Lay and Jeff Skilling and Andy Fastow were able to get all the important players - from the federal agency in charge of regulating them on down - to play along, keep their mouth shut and reap the profits.

So, in the end, this was hardly the Crime of the Century. (Maybe in terms of actual dollars stolen, but not in terms of ingenuity or creativity, is my point). It wasn't some elaborate long-con orchestrated by the most brilliant minds of their generation. I think the title might be intended as ironic. Skilling and Lay considered themselves to be "the smartest guys in the room," as if willing such a thing could be true, but they are standard garden-variety thieves and nothing more.

They embezzle, cheat, swindle and lie until someone shows up asking questions. Then they pay that person off, and repeat. And this goes on for a few years until finally, there are too many people asking questions to pay off, and the people you're defrauding have started to catch on, and there's nothing left to do but grab all the last-minute cash you can and pretend like you had no idea what was happening all around you.

These guys aren't exactly the Dirty Rotten Scoundrels. Just greedy bastards.