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Enron: The Smartest Guys in the Room   B+

Magnolia Pictures / HDNet Films

Year Released: 2005
MPAA Rating: Not Rated
Director: Alex Gibney
Writer: Alex Gibney (based on the book by Peter Elkind and Bethany McLean)
Cast: Kenneth Lay, Jeffrey Skilling, Andy Fastow, Peter Coyote.

Review by Rob Vaux

The catalyst for Enron: The Smartest Guys in the Room is the fact that while everyone knows bad things went down at Enron, few are entirely sure what they were. Scandals like the one that brought the Houston-based energy company to its knees are complex and difficult to explain, and our sound-bite culture eschews all but the most salacious facts. For most of us, it was simply enough to know that the people in charge did wrong, that thousands of employees lost their jobs, and that the ringleaders -- notably founder Ken Lay and CEO Jeffrey Skilling -- are likely to go to jail.

But that wasn't enough for director Alex Gibney, whose examination of the Enron debacle is both thorough and supremely entertaining. His film starts from the ground up, tracking the growth of the company from its earliest days, through the boom years of the 1990s, and into its fiery demise when $65 billion in assets vanished in a puff of smoke. In structure, The Smartest Guys in the Room resembles a heist flick: assembling the key players one by one before revealing how they pulled off their audacious crimes. It's sprinkled liberally with catchy tunes on the soundtrack and divided into easy-to-follow sections with colorful titles. The brisk narration from Peter Coyote keeps the facts clear and the pace moving. The results lay out what happened in engaging terms, painting a comprehensive picture that even the most obstinate layman can understand.

It's also deliciously savage in its search for blame. The film argues that -- far from a late-term lapse in ethics -- amoral behavior was a part of Enron almost from the beginning. As far back as 1987, when a pair of company oil traders based in Valhalla, NY diverted corporate funds into their personal accounts, the powers that be showed a knack for rewarding shady activities and encouraging their underlings to break the rules. Lay himself, raised from hardscrabble roots, was a fierce proponent of government deregulation, claiming that if the market could play freely (i.e., there were no penalties for bad behavior), then everyone would benefit. But it wasn't until the arrival of Skilling, and later of Chief Financial Officer Andrew Fastow, that notions of right and wrong truly went out the window.

Skilling took a "law of the jungle" approach to business, believing that universal greed served to level the playing field. His advocacy of mark-to-market accounting -- a system that allowed the company to doctor its stated assets -- was the foundation for an extended smoke-and-mirrors routine that made Enron look like the blue-chip investment of the century while keeping its liabilities behind a constantly shifting curtain. Fastow helped facilitate it by running shell games designed to mask various pieces of debt, and in the heady days of the '90s bull market, no outsiders wanted to look too closely at where these guys were getting their figures. In essence, it was all a front, allowing the heads of the company to grow fat off of inflated stock based on faulty numbers hiding nothing but empty air.

Gibney brings an impressive array of resources to this exposé, including interviews with former Enron executives and traders, statements from California's ex-governor Gray Davis, tapes of incriminating phone calls, and secretive footage from shareholder meetings. The only players missing are the biggest. Lay and Skilling, with criminal trials pending, were understandably reluctant to appear on camera, but others, from ex-executive Mike Muckleroy to whistleblower Sherron Watkins, fill in a surprising number of blanks. It's Skilling who becomes the film's central tragedian: an arrogant narcissist who fed off the media images of himself as a business god and whose practices fostered an entire culture of macho bullshit within the company. He painted rosy pictures that seduced the financial world, diverting attention from the great empty vacuum upon which his company was built. The Smartest Guys in the Room takes cynical joy in puncturing his self-made image, and more importantly, in showing how his carefully shielded insecurities matched the long-term fraud in which his company was engaged.

It all came to a head in the summer of 2000 when, focusing on California's deregulated power market, Enron and other energy companies created an artificial shortage that sent prices skyrocketing. The energy interests made out like bandits while millions of Californians endured rolling blackouts. It didn't come to an end until June of 2001, when the federal government finally agreed to price caps... though by then Enron's house of cards was finally starting to collapse. Gibney's personal politics -- which show up in flashes throughout the film -- become strongest here, which sadly works to the film's detriment. The energy crisis prompted the ouster of Gov. Davis in a recall election, which Gibney unsuccessfully attempts to paint in conspiratorial tones. (Davis had plenty of other problems, and didn't do himself any favors by capitulating to the energy companies without much of a fight.) He finds more traction when he shifts focus to the Bush administration and their unspoken complicity in California's plight -- a fact that Gibney clearly wants to develop more than he can. Indeed, the film often strains to tie Lay in with our polarizing president; it never entirely succeeds and the effort does little to credit its otherwise compelling argument.

The fact remains that what happened at Enron transcends politics. The sins portrayed in the film have nothing to do with left or right, and the tragedy that finally unfolds -- thousands unemployed, hundreds of millions of dollars gone -- is too fundamental to pigeonhole. Partisan jabs aside, The Smartest Guys in the Room views the scandal as a failure of society as a whole, and of the business world stressing -- yet again -- profit over common decency. Skilling and Lay still believe that they did nothing wrong, and their brand of self-delusion is hardly isolated. The film's most troubling question is not that the company did what it did, but that it got away with doing it for so long. As a cautionary guide to just where that road leads, Enron: The Smartest Guys in the Room is an invaluable piece of filmmaking.

Review published 04.28.2005.

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