Film / Enron: The Smartest Guys in the Room

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"Oh I can't help myself. You know what the difference between the state of California and Titanic? And this is being webcast, and I know I'm going to regret this - at least when the Titanic went down, the lights were on."
-Jeffrey Skilling

Enron: The Smartest Guys in the Room is a 2005 Oscar-nominated documentary by Alex Gibney which charts the rise, peak, and fall of the energy corporation Enron; it is based on the 2003 book of the same name by Fortune reporters Bethany MacLean and Peter Elkind.

The film simplifies some of the convoluted financial details of the White Collar Crime at Enron, comes out with some surprisingly sympathetic (though not excusing) appraisals of the criminals; and explores the little-acknowledged role that Wall Street firms played in perpetuating — and in some cases participating in — the company's fraud.


The smartest tropes in the room:

  • Adaptation Distillation: The documentary focuses mostly on the core trio of Lay, Skilling, Fastow and their trading business. Major figures described in the book like Rebecca Mark (responsible for international deals, bitter rival of Skilling, later ousted by him) and Rich Kinder (COO before Skilling, on leaving bought Enron pipeline business and turned into a multibillion company) are skipped over.
  • Affably Evil: A lot of clips are seen of videotaped sketches in which Skilling and other Enron executives engage in goofy behavior and self-deprecating humor.
  • Alas, Poor Villain: The film shows how much brightness and potential each of the "captains" of Enron had, and shows how their greedy impulses ultimately led them to squander all that brightness and potential and ruins the lives of everyone around them. On a certain level, Lay and Skilling and the others are victims of their own shortcomings along with their former employees and investors.
  • Armor-Piercing Question: Bethany MacLean's article: "Is Enron Overpriced?"
    • Richard Grubman of the hedge fund Highfield Capital asking for a cash flow statement and balance sheet for Enron's Q1 2001 earnings, prompting the famous "asshole" response.
  • Backup Bluff: The book explains that this is how Mike Muckleroy dug Enron out of the enormous hole created by the 1987 Valhalla scandal. Thanks to crooked traders, Enron found itself on the hook for billions of dollars of hydrocarbons it couldn't possibly deliver. If other firms found out how desperate Enron was, they would surely demand Enron post collateral it didn't have to cover its positions, bankrupting the company. Muckleroy therefore bought eight million barrels of oil and called round the big oil trading houses offering to sell them. This created the impression that Enron had lots of supply, giving Muckleroy and his team time to unwind Enron's position and limit their exposure from $1bn+ to a manageable $200m.
  • Berserk Button: Do not remind Skilling that Enron does not provide a balance sheet or cash flow statement. He will not react well.
  • Big Bad: Ken Lay.
  • Blatant Lies: On the part of Lay when he insists the company is in good financial condition.
    • The entirety of Skilling's trading business was based on the accounting version of this from the beginning.
  • Corporate Samurai: Pai was this to Skilling and Enron, and not because of his Asian ethnicity.
  • Corrupt Corporate Executive: Everyone.
  • Diabolical Mastermind: All of the major Enron figures, in his own way, could be considered one. In the commentary, Gibney said that the use of the Tom Waits song "What's He Building In There?" from Mule Variations at the start of the film could alternately apply to Ken Lay, Jeffrey Skilling, or Andy Fastow.
  • Disproportionate Retribution: Corporate legend attests Pai once banished an executive to Calgary, Alberta, Canada for making a bad joke.
  • Downer Ending: Made obvious from the outset.
    • To add insult to injury, on-screen text at the close of the film tells us how regular Enron employees lost thousands in savings while the people responsible for their predicament walked away with millions in bonuses.
  • The Dragon: Jeffrey Skilling.
  • Driven to Suicide: The film starts with a re-enactment of the death of Cliff Baxter.
  • Evil Genius: Andrew Fastow, what with his labyrinthine "partnerships."
  • Evil, Inc.: Enron is portrayed in the film as a criminal enterprise since its inception in The '80s. This is slightly at odds with the book, which notes that plenty of Enron businesses did make real profits - pipelines and wholesale trading for example - and that Enron until 1996 was a fairly ordinary energy firm, albeit one that contained the seeds of its future destruction.
  • Evil Tower of Ominousness: Enron's former highrise in Houston is certainly shot as if it were one.
  • Film of the Book: The film is based on the book of the same name by Fortune reporters Bethany McLean and Peter Elkind. The book contains even more details of the criminality and dysfunction at Enron, most notably the ridiculous compensation system that the International division's originators had, where they were paid bonuses based on the claimed value of the deals they landed, rather than whether they actually made Enron any money. This lead to the International division signing hundreds of dogshit deals to build power plants across the world, most of which lost money.
  • For the Evulz: The film contains disturbing audiotapes of Enron personnel who mock and laugh at the long-suffering people of California while they purposefully mess with the state's power grid to jack up electricity prices. The film actually spends a good deal exploring how the corrupt corporate culture at Enron warped the morality of its employees (especially the traders), citing the infamous Milgram experiment. They play clips of the Milgram experiment alongside news about California's suffering.
  • Idea Bulb: A stock image of one if shown before we see Skilling's face.
  • Implausible Deniability: Lou Pai got away with selling off all his Enron stock since he did it as a part of divorce proceedings and therefore could claim no knowledge of impending collapse of stock value.
  • Implied Death Threat: In an astonishing interview, Mike Muckleroy claims to have got the real trading books from the crooked Enron traders in the 1987 Valhalla scandal by telling one of them that he had, during his time in the US Navy, had to kill people and wouldn't mind doing it again.
  • Ironic Episode Title: The self-styled "smartest guys in the room" brought down a multi-billion dollar company; claimed to run an energy company, yet delivered record numbers of rolling blackouts; destroyed one of the world's most respected accounting firms as collateral damage (to be fair, Arthur Andersen had it coming to them), and the two former CEOs ultimately responsible for it all got sentenced to decades in prison between them. Played straight, then.
    • Enron's slogan at it's peak: Ask Why?
  • Karma Houdini: Lou Pai, who was one of the most ruthless Enron honchos and took out more money than the other executives yet was never criminally charged and became the second largest landowner in Colorado.
    • The major Wall Street firms — including Citibank, Merrill Lynch, JPMorgan Chase, and Credit Suisse, among others — who actively participated in some of Enron's criminal dealings, but were mostly allowed to walk away from any consequences.
    • Ken Lay himself died before his sentence could be passed, which meant that his estate was able to keep most of his assets.
  • Manipulative Editing: Although the majority of the documentary is free from this, and the allegations it makes are substantially true, the section on Enron's venture into weather derivatives is deliberately designed to suggest Enron claimed it could control the weather and that weather trading was a typical Enron sham. In fact, Enron was neither the first nor the last company to trade weather derivatives, which are perfectly legitimate, if high risk, financial instruments that continue to be traded today.
  • Mega Corp.: Subverted. Enron liked to give the impression that it was this, trying to caress the financial press into running positive stories; wildly inflating its stock price; and using rotten accounting tricks to hide the fact that the company was mired in debt and not turning a profit. Played straight in the fact Enron was so massive that there was serious talk of its failure bringing down the United States. It didn't but the consequences were huge.
  • Metaphorically True: Enron's accounting methods. Mark-to-market accounting is supposed to permit more accurate accounting of assets that fluctuate in value, such as actively-traded stocks and bonds. Enron, however, used mark-to-market to account for assets that no market to mark to, effectively allowing to estimate its profits on the basis of its own (usually wildly over-optimistic) models. In addition, Enron booked the entire potential value of a contract as soon as it was signed, and then refused to modify those estimates when the deals fell through. So even though Enron's Indian power plant and its broadband deal with Blockbuster made zero money, Enron would still put them down as profits and portray itself as a great investment.
  • Minor Crime Reveals Major Plot: The first time anyone began seriously taking a second look at Enron came when Skilling, who the film hints was approaching a nervous breakdown due to his knowledge of the company's imminent collapse, abruptly called one of his investors an "asshole" after being asked an Armor-Piercing Question during a conference call.
  • Narrator: Peter Coyote.
  • Paper Tiger: Enron was a house of cards built on lies. It was never as successful as it appeared and the best parts of the company were either built by others, purchased by Enron, and then run into the ground, or dismissed as losers by Enron, sold to others, and run into the stratosphere by their new owners (former COO Rich Kinder bought a small section of Enron pipelines and turned it into the largest energy infrastructure company in North America). As soon as anyone challenged the company, it fell apart.
  • Politician Guest Star: Disgraced former Governor of California Gray Davis is interviewed in the segment about the California energy crisis. The film also explores the strong ties Ken Lay and Enron itself had to the Bush family and to the administrations of George H.W. Bush and George W. Bush. It suggests that Enron's actions in California may have partially intended as a political hit-job on Davis, who was then a rising star in the Democratic party and was seen as a potential strong challenger to Bush in the 2004 election, and also suggests that the Bush administration's refusal to intervene during the crisis was due to Enron's influence. Indeed, President Bush's ties to Enron became a brief political controversy after the company's collapse, while Davis would be recalled in 2003, which ended his presidential ambitions and political career as a whole. While Davis blames Enron for his downfall and became somewhat Vindicated by History when it was proven that Enron created the crisis through illegal market manipulation, California's population had numerous other criticisms of Davis and there were other significant factors in his downfall beyond Enron.
  • Ponzi: A variation. Enron became primarily concerned about keeping its stock value high without having actual profits to back it up. In the end it kept reporting false profits and encouraging people to invest in their stock, even as it's actual value was plummeting.
    • Enron wanted to report increasing profits. However under mark-to-market accounting the value of entire multi-year deal was reported as profit only in the quarter the deal was signed. In order to report more profits, Enron needed to strike more bigger deals. This was, like a Ponzi scheme, unsustainable in the long term.
  • Precision F-Strike: "I'm fucking smart."
    • During a conference call, Skilling uttered the word "asshole" when he was asked to produce a balance sheet. This of course, resulted in more uncomfortable questions for Enron.
  • Reassigned to Antarctica: "Enron legend" has it that Lou Pai explained to subordinate executives at a strip club that he would drive to the gas station and pour gasoline on himself so that his wife wouldn't smell the strippers' perfume. One executive jokingly asked if Lou's wife would think that he was "fucking the gas station attendant." Lou retaliated by sending the executive to a remote dead-end post in Canada.
  • Smart People Wear Glasses: Averted en masse. Skilling used to wear glasses, but gave himself LASIK surgery while embarking on a macho image makeover. Soon, everyone else at Enron got LASIK surgery.
  • Smug Snake: When Jeffrey Skilling's instructor at Harvard Business School asked him if he was smart, Skilling replied, "I'm fucking smart."
  • Soundtrack Dissonance: Phantom Planet's "California" and the Rivieras' "California Sun" are played throughout scenes of chaos and misery caused by Enron's shenanigans during the California energy crisis.
  • Standard Evil Empire Hierarchy
    • The Emperor: Ken Lay
    • The Right Hand: Jeffrey Skilling
    • The General: Cliff Baxter
    • The Oddball: Andy Fastow
  • The Starscream: Fastow was just as concerned with enriching himself, if not more so, then advancing Enron's fraud. In the end, his murky and labyrinthine schemes became a major contributing factor to the speed of Enron's collapse.
  • Stock Footage: Gibney is fond of using stock footage in his documentaries, and the ones he uses here are surprisingly fitting for a lot of the situations and issues discussed.
  • Tragic Hero: The film portrays the Enron executives as this, suggesting that they truly were inspired visionaries who were ultimately destroyed by their own greed and hubris.
  • Token Good Teammate: Mike Muckleroy, the Texas oil trader who fixed the Valhalla scandal for Enron, effectively saving the company.
  • Villain with Good Publicity: Enron embarked on a massive public relations campaign portraying itself as one of the most radical, cutting-edge and prosperous corporations in the country, beguiling investors, stock market analysts and financial journalists alike. By the time it collapsed, Enron had been named "America's Most Innovative Company" by Fortune magazine for six consecutive years.
  • Villainous B.S.O.D.: Skilling in the months leading up to his abrupt resignation as CEO.
  • White Collar Crime: One of the most infamous examples pre-Great Recession.
  • You Have Outlived Your Usefulness: Happened to Enron. The book details how the Bush White House ignored Ken Lay's pleas for a federal bailout, judging that the political stink would be more trouble than Enron's contribution to Bush's election was worth.

Ask why, asshole.
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