How did one of the country’s largest companies go from riches to rags almost overnight, if it ever truly had riches in the first place? That question is skillfully and intelligently answered in this weekend’s film recommendation: Alex Gibney’s 2005 documentary Enron: The Smartest Guys in the Room.
The title refers to Ken Lay and Jeff Skilling, who convinced themselves and the world that they had a created a new kind of company that could make unprecedented profits in the energy sector. As one insider puts it, as each quarterly report approached it seemed the company was not going to make its numbers yet somehow it always did, and then some. Enron’s astronomical reported profits did not gain credibility in a vacuum: Its books were audited by Arthur Anderson, its accounts were interconnected with those of some of the nation’s most trusted financial firms (e.g., Merrill Lynch) and all the “objective” stock analysts were singing the company’s praises. But of course it was all a lie, and it unraveled with shocking speed and horrific destructiveness.
This movie adroitly combines interviews of journalists, former Enron insiders and political figures with archival news footage (e.g., Skilling and fellow crook Andrew Fastow’s Congressional hearings) and some truly damning movies made by Enron executives themselves. Although it’s a bit long-winded at 110 minutes, the film has an admirable ability to explain even to financial novices how Enron executives defrauded investors (not least its own rank and file employees) as well as put California through living hell by intentionally starving the state of electricity.
When this muckraking documentary came out, some critics complained that the film massaged the facts for the sake of left-wing axe-grinding. The narrator being staunch anti-capitalist Peter Coyote and one of the key interviewees being the lawyer who led the class action suit against the company (Bill Lerach) could trigger worries for some viewers that the film is simply comfort food for socialists. But any concerns about bias disappear as the film unfolds because the perpetrators so thoroughly hang themselves before the viewers’ eyes. The film accuses Enron of dodgy “mark to market” accounting and backs it up with Skilling himself appearing in a company produced comedy sketch where he brags about the phony nature of Enron’s books. Likewise, the accusation that Enron traders delighted in destroying California with contrived energy shortages and price gouging is immediately backed up by audiotapes of traders laughing over doing just that (Most disgustingly, cheering on a raging wildfire because it is damaging power lines).
Gibney has done a public service with this movie, but it doesn’t feel like eat your peas viewing. It’s fascinating, disturbing and compelling throughout. And also, there is something refreshing about a movie in which white collar criminals who steal billions actually go to prison in the end. Those were the days.
p.s. Interested in a different sort of film? Check out this list of prior recommendations.
[Cross-posted at The Reality-Based Community]