Enron: caught on camera

‘Unimaginable personal excess’, ‘an utter moral vacuum that posed as
corporate philosophy’, ‘wringing hundreds of millions of dollars in profits from
innocent people’ and ‘obscene avarice’ are not words you expect to hear flowing
from a cinema screen, but ring all too true for thousands of US citizens,
business people, its government as well as the global economy which felt the
repercussions of Enron’s disastrous business practices.

Despite the endless column inches devoted to the story, at the end of a
preview screening of a new documentary, Enron: the Smartest Guys in the
Room, it is hard not to feel shocked by the ugly images of corporate
America that were constantly flickering and reverberating before my eyes and
ears.

All those bogus boardroom smiles, fake tans and macho trading-floor
attitudes. All that complicity to gain as much money in as little time as
possible at the expense of ordinary hard-working citizens. All those lies; all
that fraud; all that greed. And all that topped off by one of the most
unanswered questions in corporate history: how did we allow one of the biggest
business scandals the world has ever seen to actually happen?

Unfortunately, as the viewer sits through the 110-minute feature, the irony
never seems to die. As testimony after testimony of its executives’ fraudulent
activities are replayed, Enron’s red, green and blue corporate logo is
repeatedly flashed up, along with its motto, ‘ask why’.

We are reminded that, as analysts sat calmly examining its falsely inflated,
ballooning share price, and as Enron employees listened to endless meetings
headed by former CEO Jeff Skilling and ex-chairman Kenneth Lay, no one actually
sat back and asked the obvious: why?

This sad paradox is central to the film. Named after Lay and Shilling’s
arrogant self-descriptions, The smartest guys in the room begins with an
immediate irony. As the camera pans out from the imposing grey Houston skyline
it reveals a banner spread across a church that reads ‘Jesus saves’. At the same
time an anonymous southern drawl, deep-throated and preacher-esque, is heard
questioning, ‘what’s he building in there? Is he hiding something from the rest
of us?’

The tone of deception is immediately set, while the questions are some of the
only ones we hear until the film’s dramatic conclusions. By then the damage has
already been done.

The sombre tone continues but with the feeling that the Enron disaster was
not just about numbers but people, and the tragic mark it has left on human
lives. A priest, still counselling now pensionless ex-Enron employees three
years later, aptly suggests sighingly that the ‘house of cards was built on a
ton of gasoline’ ready to explode at a moment’s notice.

However, the following scene depicts the all too real image of human loss
with a reconstruction of one of the company’s top executives, Cliff Barker,
driving to a remote location and shooting himself in the head on 25 January
2002. Days before Barker’s suicide, Enron’s share price had plunged below $1,
Lay had resigned and Arthur Andersen had announced that its Houston division had
shredded thousands of documents related to the crumbling energy company.

The trouble is, as the film alleges, ‘Kenny Boy’ (Lay) and the ‘man with the
big idea’ (Skilling) as well as other ex-Enron executives allegedly got away
(Skilling and Lay await trial in January 2006) with a total of around $1bn
through a blend of mark-to-market accounting (signed off by the SEC and Arthur
Andersen), false profits, a determination to see through the de-regulation of
the energy industry, friends in high places (the Bush family) and the selling of
stock at ‘just the right time’.

Lou Pai, former head of Enron Energy Services, was one of the principal
culprits.

The ‘invisible CEO’, as Pai was known, left EES with losses of over $1bn and
conveniently pocketed over $250m, while simultaneously becoming the second
largest land owner in Colorado. Nice work if you can get it.

Meanwhile, in the wake of scarpering execs who fled with millions of dollars
falling from the linings of their suit jackets, and in one of the film’s final
scenes, the company’s employees are left with a mere 30-minute window to clear
their desks and leave the 1400 Smith Street Houston HQ. Not only this, their
longer-term worries were yet to come with a pension black hole several hundreds
of thousands of times bigger than Pai, Skilling and Lay’s combined alleged
plundering.

The image of Skilling being hit in the face with a blueberry cream pie thrown
by an investor hardly eases the devastation left by Enron’s executives. We learn
that this and other complaints were all far too little and far too late.
Tragically, no one, as the film suggests in its last line, asked why.

Enron: The smartest guys in the room is scheduled for general release in
the UK in January 2006

ENRON TIMELINE

Jan 1987: Enron discovers that oil traders in their
Valhalla, NY office have been diverting company funds to their personal
accounts.
April 1987: Board learns that Louis Borget and Tom Mastroeni,
the men in charge of the Valhalla operation, were gambling beyond their limits,
destroying trading reports and manipulating accounts. Founder, chairman and CEO
Kenneth Lay increases their trading limits.
Oct 1987: Lay professes shock at the actions of the traders.
They are fired. Borget spends one year in jail; Mastroeni receives a suspended
sentence.
Jun 1990: Jeff Skilling joins Enron from Mckinsey.
Jun 1991: Enron asks SEC to approve mark-to-market accounting.

Dec 1996: Skilling takes over as COO.
Jun 1999: Board exempts CFO Andrew Fastow from company’s code
of ethics so he can run a private equity fund.
May 2000: Warning of low power reserves. Stage One Emergency
declared.
Feb 2001: Skilling takes over as CEO. Senior Andersen partners
meet to discuss whether to retain Enron as a client. They call use of
mark-to-market accounting ‘intelligent gambling’.
Aug 2001: Skilling’s resignation announced.
Sep 2001: Skilling sells $15.5m of stock, bringing stock sales
since May 2000 to over $70m.
Oct 2001: Andersen destroys documents.
Nov 2001: Enron files with SEC revising its financial
statements for past five years to account for $586m in losses. Enron shares
plunge below $1.
Dec 2001: Enron files for bankruptcy protection.
Jun 2002: Andersen convicted of obstruction.
Aug 2002: Andersen surrenders its licence to practice
accounting in US ­ 85,000 jobs lost.
Oct 2002: Fastow indicted on 78 charges including conspiracy,
fraud, money laundering.
Jan 2004: Andrew and Lea Fastow plead guilty. Fastow agrees to
serve 10 years and forfeit $23.8m.
Feb 2005: Fraud and conspiracy trial of Kenneth Lay and Jeffery
Skilling set for January 2006.