Inside Enron

Review by Willard Manus

Enron, the disgraced company that fleeced the world of an estimated one billion dollars, used to flaunt its advertising slogan: "Ask Why." Hatched up by Madison Avenue, the slogan was meant to convince us that Enron was unafraid to challenge conventional business thinking, that it was led by brave and noble executives who, if left alone, would find new ways to create wealth and prosperity for us all.

Today we know what a crock that was, a lie invented to cover up corporate fraud, rapacity and selfishness on an unprecedented scale. Enron, America's seventh largest company, has collapsed, in a domino effect that has taken down many other business institutions and ruined the lives of thousands of innocent people.

Enron's slogan still has an unintended resonance. We all need to "ask why" the company collapsed the way it did. Why didn't the so-called watchdogs of the business world--accountants, bankers, stock analysts, journalists, government officials--see it coming? Why didn't they blow the whistle on a scandal of such massive proportions?

The answers can be found in ENRON: THE SMARTEST GUYS IN THE ROOM, the new full-length documentary by Alex Gibney. Based on the best-selling book of the same name by Bethany McLean and Peter Elkind, the film offers a meticulous and damning portrait of the Enron scandal--and of the larger society which allowed it to happen.

Comprised of interviews, TV footage, audio tapes and home movies--mostly shot by Enron employees on company outings--Gibney's documentary, an official Sundance 2005 selection, was shot by Maryse (Velvet Goldmine) Alberti and edited by Alison (American High) Ellwood, and produced by Magnolia Pictures.

"Through Bethany and Peter's writing I saw that the story of Enron was more than a corporate scandal," said Gibney. "It was a human drama with the emotional power of a Greek tragedy--yet tinged with the blackest humor imaginable. The film allowed me to explore some larger themes about American culture, the cruelty of our economic system, and the way it can be easily rigged for the benefit of the high and mighty."

As Gibney shows, Enron flourished largely because of the de-regulation of the energy industry. Pushed by powerful politicians on behalf of the corporations that contributed heavily to their campaign coffers, de-regulation--a euphemism for no government supervision--allowed men like Kenneth Lay and Jeff Skilling a free hand in the manipulation of the energy market.

Lay, the son of a Texas Baptist minister, and Skilling, a slick, handsome wheeler-dealer whose macho ways--bungee-jumping, motorcycle-racing-- masked a depressive personality, teamed up to turn Enron into not just a gas-pipeline company, but a commodities trader and dabbler in the burgeoning broadband/video-on-demand sector. Using dubious "mark-to-market" accounting tricks, shady ways of "gaming" the energy market, and out-and-out fraud (a Nigerian tax scheme), Lay and Skilling began to ring up millions of dollars in profits.

Although a few shrewd, uncompromising critics, such as investment analyst James Chanos and ex-Enron executive Rebecca Mark, voiced their concerns, few listened, if only because people like Alan Greenspan, Scott McNealy (CEO of Sun Microsystems) and the Bushes were constantly praising Enron in public. The same goes for the heads of Citibank, Merrill Lynch and Chase Manhattan, all of whom bagged lucrative commissions while representing Enron.

Enron turned out to be a gigantic Ponzi scheme and some employees knew it. The film captures several Enron traders on tape, gloating loudly, "Burn, California, burn!" as they fabricate an energy crisis for their own personal gain.

Most Enron employees took it on the chin, though, when the company went down, taking all their profit-sharing and pension money with it. As for Skilling, Lay and other top execs, they walked away from the crash in pretty good shape, having cashed out their stock just before it plunged from $67 a share to
below $1.

Gibney ran into an unforseen problem in putting his film together. "At one time, the network news archives treated their footage as a historical resource available to all," he said. "Now they apply entertainment standards to the material. Want footage of Brian Williams discussing the stock market bubble? Special permission and extra fees are required, because he is expensive 'talent' to whom the network wants exclusive access...The need for these special permissions also provides the networks an excuse to deny access to productions they do not approve of. For ENRON--and for many other documentaries--these new policies can have a chilling effect. They're simultaneously ironic because the major networks all share footage freely--at no cost to each other--via the doctrine of 'fair use.'"