Enron: The Smartest Guys in the Room, 110 mins, rating TBA, opening in cinemas on 13 October 2005.

By MICHELE ASPREY, Lawyer

(This is my review as  published in the October 2005 issue of The New South Wales Law Society Journal)

Enron: The Smartest Guys in the Room is based on the best-selling book “The Smartest Guys in the Room” by Fortune magazine journalists Bethany McLean and Peter Elkind. The story of the rise and fall of energy producer turned energy trader has played itself out in the news over the past few years. Two of its directors (Chairman Kenneth Lay and CEO Jeffrey Skilling) still await trial on fraud and conspiracy charges. The story is not yet over, but the facts are quite familiar. Enron was one of the largest corporations in the USA (it was the 7th largest). Its bankruptcy was America’s largest, until Worldcom took away that particular honour. And when Enron went down it took the venerable name of Arthur Andersen with it (even though in May 2005 the US Supreme Court overturned the obstruction of justice conviction).

With this film the director, Alex Gibney (who also produced and wrote The Trials of Henry Kissinger (2002)), has wrapped up all the details into a neat package. He has a wealth of material to draw on. He has used video- and audio-tapes, some of which (especially the in-house videos) are breathtakingly frank. He has plenty of good interview material, too, some from whistle-blowers and ex-employees, and some from politicians (mostly Democrats), financial journalists and authors (including Bethany McLean). All of this is put together cogently, with just enough financial detail to tell the complicated story of fraud, deception, and creative accounting, but without too much fiscal mumbo-jumbo. “It’s not a story about numbers; it’s a story about people,” says Gibney, “…about people, like Icarus, who flew too high and too close to the sun.”

Gibney enlists the comforting and slightly sardonic voice of Peter Coyote as narrator. Music is used effectively and humorously, to underline points and keep things interesting. Kenneth Lay is “The Son of a Preacher Man,” and “That Old Black Magic” illustrates how two Enron executives fiddled the accounts to hide massive losses. Only once does the director resort to using a re-enactment: the film begins with a suicide, and re-staging that is one of the few misjudgements in the film.

Although there is a definite agenda here, critical of corporate greed, there are more than just the usual accusations. Gibney points the finger directly at Lay and Skilling: they must bear ultimate responsibility for the company’s failure. They not only presided over the company, but also encouraged the sort of behaviour that eventually brought the company down.

Unlike the film The Corporation (Abbot & Achbar, 2003, reviewed in the August 2004 issue of the Law Society Journal), this film does not blame the corporation alone, but sheets home personal responsibility as well. We see how Lay, Skilling and other executives of Enron fostered an atmosphere that encouraged the pursuit of profit at all costs, and hired young people (mostly young macho men) who would stop at nothing to make more money, then rewarded them when they did so, no matter how.

One riveting section of the film shows how Enron energy traders manipulated the market in California, inflating power prices, and supposedly precipitating the rolling blackouts in 2000 and 2001, costing the State 30 billion dollars (California is suing). “Let 'em use [expletive] candles,’’ chortles one trader, drunk with power. The film also alleges that this helped to bring down Governor Gray Davis and install Arnold Schwarzenegger in his place – though the evidence for that allegation is a bit thin, and Davis seems absolved of all responsibility.

According to the film, the blame for Enron lies not only with the directors and the traders, but also with Enron’s advisors: the accountants, lawyers and bankers who checked their books, gave them advice, and lent them money. Why, the film asks, didn’t anyone see that what was happening was wrong? Or was everyone just making too much money to care? At the end of the film we learn that Skilling’s lawyers had been paid $23 million dollars for his defence. At the same time the Enron employees’ retirement accounts were frozen and lost most of their value.

Enron: The Smartest Guys in the Room is a chilling examination of the people behind a corporation that wrote its own rules, cooked its own books, set its own stock price – and thought it could go on forever.