Enron: The Smartest Guys in the Room
- Andrew Fastow
- Kenneth Lay
- Peter Coyote ( narrator)
Enron - The Smartest Guys in the Room is a documentary about one of the biggest bankruptcies of U.S. economic history and their causes. The documentary, released in 2005 based on a book by Bethany McLean and Peter Elkind. Both are in the credits of the film as authors mentioned together with director Alex Gibney. In 2008, the original DVD was released with German subtitles.
Due to consistent accounting fraud to enrich the managers in charge of U.S. energy giant Enron and led in 2001 one of the largest bankruptcies in economic history brought that destroyed over 20,000 jobs and, among others, the staff pension fund over two billion dollars. The film deals with the collapse, which was caused by extensive accounting fraud of the responsible manager. Also, the film shows the involvement of the company in the California electricity crisis. It includes interviews with the authors McLean and Elkind, with former Enron executives Enron brokers, analysts, journalists, former California Governor Gray Davis, and contains proprietary recordings of staff meetings as well as original recordings of the hearings after the bankruptcy.
The film won the Independent Spirit Awards 2006 for Best Documentary and was nominated for the 2006 Oscar.
Action
Against the background of the hearing will be conducted later career and the scandals of Kenneth Lay, who founded Enron in 1985, pointed out. Just two years after the founding of Enron was involved in a scandal when graduating two securities dealers with company funds risky transactions in the oil market. In addition, it is reported that Enron's CEO, Louis Borget, corporate funds diverted to an offshore financial center. As in an audit these machinations were not revealed, Kenneth Lay encouraged his employees " to rake in billions more ." After it emerged that Enron's reserves were put at risk by this procedure and the company was on the brink of ruin, the staff were including Louis Borget dismissed and sentenced to prison for embezzlement. Although he was aware of the extremely risky business, Kenneth Lay denied any involvement in the scandal.
Kenneth Lay then set a new one CEO, Jeffrey Skilling, who saw to it that Enron went from being an energy producer to a company that in the commodity markets with energy, especially natural gas, acted like a stockbroker. He wanted to buy natural gas as a share similar product and sell. But most importantly, he made sure that certain projects in the balance sheet were rated higher new and especially ( "Mark to market" ). Thus, expected long-term income were reported immediately after conclusion of the contract as existing revenue, debt appeared in the books as assets, and investments in tangible projects were valuable supposedly out already before they were ever realized. This Enron could subjectively give the impression to be a highly profitable venture.
The film describes in minute detail how Skilling Enron imposing his Social Darwinist viewpoint of corporate governance when he instituted an in-house review committee. This had the requirement to dismiss 15 % of employees each year. For this purpose, we classified the employees about their performance, and then fired the weakest, which were deemed insufficient for the achievement of corporate goals. This led to a strong competitive spirit within the company and an extremely poor working atmosphere.
Skilling presented a so-called " lieutenants " who expressed through the implementation of its instructions in the company. They were known internally as " the guys with the spikes ." Among them were J. Clifford Baxter, a manager who was known as manic-depressive, and Lou Pai, CEO of Enron Energy Services. Pai was known that he regularly paid with corporate funds visits to strip clubs and allegedly even invited strippers to his office. Pai sold his shares for $ 250 million left after surprising the company. Regardless of the amount of such sum, the once rich Pai, made the subsidiary, which he directed, a loss of a billion dollars - a fact that was covered by Enron. Pai bought with his money, a large ranch in Colorado and was the second largest landowner in the state.
While in the stock market through the Internet bubble prices increased, Enron tried to deceive the analyst by reaching the quarter goals. Managers were pushing this course and silvered after their stock options in a process they called " pump up and throw it away " ("pump and dump " ) called.
Enron is also launching a massive PR campaign in which the company presented although their global operations poorly developed as a profitable and stable. A huge miscalculation was the construction of the " Dabhol Power Plant", a power producer in India. This operation was later decommissioned and about one billion U.S. dollars down the drain as ultimately enough power could not be created and no buyer was found for the electricity generated. Nevertheless, millions of dollars have been made to bonus payments to senior staff due to the basis of the sugarcoated sales figures.
In addition, Enron invested in broadband technology to about movies for sale, as well as in the sale of weather reports; these exposures failed. Nevertheless, still non-existent by the appreciation of the assets in the balance sheet gains were reported.
Enron's success was at its peak when it was designated in 2000 as one of the Internet -based company that has successfully survived the bursting of the dotcom bubble. In addition, it has been recognized by Fortune magazine as the company with the " highest standing". Nevertheless presented Jim Chanos, an investor, and Bethany McLean, a Fortune reporter, due to irregularities in the financial statements and equity valuations of the company this success in question. Skilling called McLean's approach then " unethical " and accused the Fortune magazine that the report was intended to counteract a positive image in the Business Week. However, a meeting with Andrew Fastow (CFO ) and two other employees were agreed on the following day, at the Bethany McLean, the discrepancies should be resolved. Later it turned out that Fastow a network of front companies invented, by which he was able to facilitate without the knowledge of Lay or Skilling Enron by several million dollars and at the same time conceal the company's debts. Fastow also drawn benefits from the greed of investment banks such as Citibank and Merrill Lynch, which he persuaded her into these bogus companies to invest so that Enron could ultimately enter into transactions with itself. In the end, however, Enron had more than 30 billion dollars in debt.
It is thoroughly documented as another scandal, the Enron triggered concerned the electricity crisis in 2000 /2001. After 1996, the partial deregulation of the electricity market, it was decided Enron knew this to use for themselves. It acquired with the purchase of " Portland General Electric" the greatest Californian electricity producers and thus increased in the current production. However, as previously for natural gas, attempts in this field, power to act as a product of like a stock order, especially the price to drive high. Enron exported not only electricity in other states if the price was high enough. They drove intentionally producing its own power plants down to the prices to drive even higher. In addition, you can still lock in addition betting on rising prices in the electricity market, since they could affect this yourself.
The film draws on original documents of the company and shows internal video recordings of staff meetings and tape recordings. This is documented, among others, as Jeffrey Skilling in April 2001, when the end of the company came slowly closer, insulted an analyst in a conference call. This was emphatically pointed out that Enron was the only American company that publishes any information about one's own cash assets.
Rounding out the recordings by single -action scenes that represent, for example, situations in gambling and thus show a parallelism with the information presented.
Awards
- Second place in the competition of the Los Angeles Film Critics Association 2005
- Nominated as " Best Documentary " at the Online Film Critics Society Awards 2005
- Winner of the Independent Spirit Awards 2006
- Nominated as " Best Documentary " at the Academy Awards 2006