Sierra's September/October 2005 Let's Talk book selection: Enron: The Smartest Guys in the Room A film by Alex Gibney
Review by Reed McManus
What it's about
"Burn, baby, burn!" two Enron traders chant upon hearing that wildfires are impeding an electrical transmission line in California. Their Houston firm had masterminded the Golden State's energy crisis of 2000-2001, and a natural calamity only tightened the noose. That audiotape, and images of Enron CEO Ken Lay bragging in corporate videos, makes you realize that blaming "a few bad apples" doesn't fly when a corporation's entire culture revolves around arrogance, greed, and gaming markets. This taut documentary is based on the book The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, by Fortune magazine reporters Bethany McLean and Peter Elkind.
Where to get it
Currently in limited theatrical, Enron: The Smartest Guys in the Room will be available for purchase and rent on DVD in early 2006. For up-to-date information, check out the film's Web site at enronmovie.com.
About the filmmakers
Alex Gibney is a veteran of hard-hitting films, having written and produced The Trials of Henry Kissinger and produced Soldiers in the Army of God (which examines the radical fringe of the antiabortion movement) and Speak Truth to Power, a PBS drama special about human-rights activists, starring Sigourney Weaver and Alec Baldwin. Gibney is at work on Possibilities, a film about jazz pianist Herbie Hancock, and The Ten Commandments, a series of ten 60-minute films, each by a different director.
Is this a movie about one bad apple and its egregious practices? Or is Enron an example of corporate culture at large?
Taking the latter idea one step further, does the film portray an inevitable dark side of human nature, of hubris and arrogance? Or are the real problems capitalism and deregulation? Could a strong watchdog mentality at the Securities and Exchange Commission have stopped Enron's relentless efforts to deceive?
In 1978, a Harvard Business School professor asked his students what they would do if they discovered that a product they manufactured was potentially harmful. "I'd keep making and selling the product," replied Jeff Skilling, who went on to become Enron's president. "My job as a businessman is to be a profit center and to maximize return to the shareholders. It's the government's job to step in if a product is dangerous." If you were dean of Harvard Business School, what books or other works would you require students study to learn ethics and honesty?
Does it surprise you to hear that Skilling was right? Corporate charters--and subsequent court cases--have affirmed that business should be conducted "primarily for the profit of stockholders." Should corporate charters include ethical responsibilities--such as worker and environmental protections--in addition to legal and economic ones? How would you ensure that such provisions aren't what the California Chamber of Commerce calls "job killers"?
At Enron's top levels, executives knew of their wrongdoing, but everyone passed the buck. Other than changing business laws, how can we influence the "bottom line" mentality of corporations that puts fast profits ahead of ethics and basic honesty?
The business-journalism community of the late 1990s was infatuated with the ongoing economic boom, as were many Americans who watched their stock values soar. This gave Enron plenty of cover. How do we maintain a critical eye even when we may profit from the status quo?
Some say that Enron took advantage of the California energy market because the state's rules--enacted by the state legislature and approved by then-governor Gray Davis--were deeply flawed. How much responsibility does the state bear for creating the system Enron figured out how to manipulate?
Under California's "partial deregulation," the highest bidder of the day set the price for all energy sales. That allowed an unscrupulous player like Enron to manipulate pricing and supply. Do you think energy prices and supplies should be regulated or deregulated?
Enron was the largest single contributor to George W. Bush's 2000 election, and at the height of the California energy crisis, Vice President Dick Cheney testified against the imposition of utility price controls. But Enron's contributions made their way to the Democratic Party too (though in far smaller amounts) and deep into the pockets of 71 senators and nearly half the House of Representatives. Court decisions have determined that campaign contributions are a form of protected speech. How would you reconcile such a right with the desire to temper the influence of an entity like Enron?
Among the overabundance of villains and people who looked the other way are a few heroes: Sherron Watkins, the Enron vice president and whistle-blower who repeatedly tried to steer her company in the right direction; an Enron trader who lost his job when he questioned the company's numbers; and McLean, the Fortune magazine reporter who first scrutinized the company for the general public. Does this give you hope that a handful of people can make a difference?