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ENRON: The Smartest Guys in the Room – Pride and greed at their worst

byStaff writers
20 November 2005
Reading Time: 2 mins read
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Starring: documentary film
Director: produced & written by Alex Gibney
Rated: M

IN the Catholic tradition two of the seven deadly sins are pride and greed.

If ever there was a portrayal of those traits on the silver screen Enron: The Smartest Guys in the Room is it.

Founded in 1985 by the charismatic Ken Lay in Omaha, Nebraska, Enron was a natural gas company.

Very successful and aggressive from the start, it expanded quickly.

Enron had accountability problems early on, from which, to its eternal shame, it never learnt.

In 1990 Jeff Skilling joined the company and soon became the chief operating officer to Lay’s chief executive officer.

In 1991 Enron asked the government watchdog to approve “mark to market” accounting, where they could hedge profits on projections rather than actual income. It was approved.

Throughout the 1990s Enron grew into one of the largest and most competitive energy companies in the US, acquiring businesses all over the world, with 20,000 employees, posting huge profits and a soaring stock price.

Enron fulfilled the so-called great American dream so well that it successfully fended off all internal, shareholder, press and government investigations and disquiet into its actual financial state and irregular accounting.

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On February 19, 2001 Fortune magazine journalist Bethany McLean, who could not reconcile the company’s performance claims with their balance sheet, wrote a piece entitled, “Is Enron Overpriced?”

It was the beginning of the end. Within 10 months Enron filed for bankruptcy.

On January 17, 2006, Lay and Skilling will go on trial for fraud and conspiracy as a result of the largest single corporate collapse in world history.

Based on McLean and fellow financial journalist Peter Elkind’s book, this riveting documentary is a must-see.

For the uninitiated, there are moments when Enron’s commercial history and the business jargon is a bit heavy and dull, but the drama of the pride and greed played out in this story far outweighs these flatter moments. This is a real-life Wall St.

While director Alex Gibney portrays the Enron story as a Greek tragedy for all its worth (pardon the pun), he keeps a good eye on the human fall-out of Enron’s demise as well. About 20,000 employees lost $2 billion in pensions, retirement benefits and health insurance.

In the US, where the social security net is nowhere near as generous as here, this has wrecked lives.

This film also asks how Enron could get away with its activities for so long, and who is to blame. Merchant bankers, stock analysts, the now discredited and defunct accounting firm Arthur Andersen, government departments, a ruthless internal competitive culture, and all but a few brave business journalists come in for a pasting.

In Enron’s world, pride and greed were endemic.

In universities throughout Australia, commerce, economics and business faculties are the fastest growing schools on campus. This film should be compulsory viewing for every student there, for Year 11 and 12 students who are contemplating their choices, and the so-called “mum and dad” stockholders who, mostly through ignorance, sacrifice conscience for profits.

But this film is not only for this select group, because it asks all of us what sort of ethical business culture we want, where we can gain the entire world, and lose our very souls.

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