Seeing Is Believing

The tale of Enron unreels like an ancient parable -- something out of the Old Testament, perhaps, or maybe a gory Greek tragedy: clever men allowed to rise to impossible heights, and then dashed to the depths for the sin of pride and hubris. Director Alex Gibney knows as much -- he opens his savage dissection of the 2001 energy-company collapse with a shot of the church that stands next to the corporation's glistening, mirrored offices. "Jesus Saves" is written on the church's façade, dwarfed by the Enron building. When men have tried to fashion themselves into gods, the scene seems to point out, divine intervention is the last thing they can expect when they fall.

Based on the 2003 bestseller of the same name by Bethany McLean and Peter Elkind, Enron: The Smartest Guys in the Room is a devilishly entertaining film, tracing the meteoric rise and catastrophic fall of the seventh largest U.S. corporation with meticulous zeal. The company's demise was a financial scandal on an epic scale -- one that relied on the complicity of a huge array of Enron executives, lawyers, financial advisers, banks and perhaps even the White House, the film alleges. The consequences for employees were staggering: 20,000 jobs and two billion dollars in retirement funds and pensions evaporated when Enron went belly-up. Meanwhile, the execs at the top had cashed in their stock options before the company hit bottom -- they now face multi-billion dollar lawsuits from their former employees, many of whom have lost their entire life savings.

Enron does a bang-up job clarifying the imposingly complex schemes and "accounting" behind Enron's spectacular failure. "People perceive [the Enron story] as a story that's about numbers, ... " says McLean in the film, "but in reality it's a story about people."

The film brings those people into sharp relief through interviews with former employees, C-SPAN footage, phone recordings, and, most devastatingly, through internal Enron promotion videos. One such recording -- a comedy skit, no less -- shows former Enron CEO and president Jeffrey Skilling har-har-ing over his new invention, "HFV," or the "hypothetical future value accounting" system. Unfortunately for Enron, the joke was on them. The HFV was nothing other than the company's real-life accounting method -- the mark-to-market system, in which the future profits from deals were recorded the day the agreements were signed. There was little interest afterwards in checking to see if those projected numbers ever matched up with the true earnings. And in nearly every case, they didn't, by millions of dollars.

As the company's accounting system demonstrates, Enron wasn't exactly a reality-based organization. Headed by Skilling, a devotee of The Selfish Gene and a profligate gambler in his youth, the company had an ubermenschian passion for "visionary innovation" and "the newest thinking" and "big ideas." When those big ideas didn't reap big profits, Enron execs devoted their energies to finding shady ways to drum up the funds. They also expended vast amounts of effort towards convincing stock analysts and the general public that Enron could defy economic gravity. The books complied -- through the magic of mark-to-market accounting, the company always posted tremendous gains. At Enron, says one observer in the film, "Perception is the reality." The company seemed to turn the Cartesian declaration of "I think, I am" outwards: I think, therefore it is.

As depicted in Enron, the company's corporate culture was ruthless, a nightmare brew of Ayn Rand and Social Darwinism. Employees were ranked on their work performance by their colleagues on a scale of one to five; a full ten percent of the workforce was required to be slotted in the "five" ranking and fired every year. At the same time the corporation was winnowing the weak from its ranks, Enron was rising high on the puffery of ego and hot air -- the corporation told the survivors that "if we were smart, anything could be accomplished," says Amanda Martin-Brock, a former Enron executive. And so, with the feeling of invincibility particular to those who sail unsinkable ships or tattoo lovers' names onto their bodies, Enron set out to make over the financial world in its own impossible image.

Enron is impressively sourced and researched, and takes its audience through the labyrinth of the company's daunting array of back-door deals and unethical schemes with admirable ease. Among them: an oil-trading run that depleted Enron's reserves and a plan to sell bandwidth and provide home-video content that tanked fantastically. Jury selection for the executives in charge of the bandwidth scheme has already begun -- trials for Enron chairman Kenneth Lay and Skilling will begin later this year.

Perhaps the most notorious of Enron's disastrous plots was its role in the 2000 and 2001 California energy crisis. Desperate to dig themselves out of a hole, Enron execs began exploiting loopholes in California's energy deregulation policy -- the company's traders began ordering power-plant shutdowns to drive up the price of electricity. As images of California brush-fires and rolling blackouts flicker across the screen, Enron plays recorded conversations between the corporation's traders as they whoop with glee at the rising price of energy, wish a plague of natural disasters on the state, and guffaw over the possibility of retirement "by the time we're 30." The cost to California? $30 billion and one recalled governor, the film alleges.

Enron points to a 2001 meeting between Lay and Arnold Schwarzenegger, implying that the corporation helped Schwarzenegger take advantage of an environmental fiasco the company had created. Gibney also draws tantalizing connections between the White House and "Kenny Boy" Lay, implying that Enron escaped monitoring by federal oversight agencies because of Lay's generous contributions to the Bush campaign. While these aspects are perhaps some of the most intriguing elements of the film, Enron can't ultimately do much more than speculate. The film does a far better job documenting the ways in which investment banks, stock analysts, and the accountants and Arthur Andersen greedily lapped up and helped perpetuate Enron's tales of success in order to secure their own millions.

Enron moves at a brisk clip, its stock footage and interviews woven together tightly for maximum impact. Occasionally, however, the film slips into a bit of glib shorthand in order to make its points. The documentary abuses some footage from the notorious Milgram experiment and is rather too impressed with its ability to find just the right pop tune for ultimate didactic effect. This affinity for rhetorical zingers also afflicts its portrayal of at least one of the top players -- the film's depiction of Asian-American former exec Lou Pai as mysterious, meek, and fascinated by strippers is just one step away from calling the man an inscrutable perv.

The film is a savagely entertaining success, however, when it takes a broad view -- tracing out the company's hare-brained schemes, showing the collapse's effect on employees, fleshing out the mythos of Enron's culture, and raising the larger questions about the impact of unchecked business on the hearts, souls, and well-being of Americans far away from Enron's Houston offices. Enron was the house that free-market capitalism and deregulation built -- examining its allure and demise can tell us much about what responsible business and responsible individuals should avoid, the film seems to say.

In the end, Enron was brought to its knees by its inability to put its own advertising slogan -- "Ask Why" -- into practice, says one former worker. Why were the books not making sense? Why didn't employees protest Enron's cutthroat culture? Why did so many become complicit in plots to rip off stockholders, colleagues, and the unwitting U.S. public? This film dares to ask -- and provides some harrowing answers along the way.