Enron: The Smartest Guys in the Room is a 2005 documentary film that explores the rise and fall of the Enron Corporation, a company that was once considered one of the most innovative and successful in the world. The film, which is based on the book of the same name by Fortune reporters Bethany McLean and Peter Elkind, presents a detailed analysis of the Enron scandal, which resulted in the company's bankruptcy and the conviction of its top executives for fraud and other crimes.
The film begins by introducing the main players in the Enron story, including CEO Kenneth Lay, CFO Andrew Fastow, and top executives Jeffrey Skilling and Lou Pai. It then traces the company's history from its beginnings as a small natural gas pipeline company to its rapid expansion into other areas such as energy trading and telecommunications.
One of the main themes of the film is the culture of corporate greed and dishonesty that existed at Enron. The company's top executives, who were known as "the smartest guys in the room," were more concerned with enriching themselves and manipulating the company's financial statements to mislead investors and boost the company's stock price than with running a responsible and ethical business.
For example, the film shows how Fastow and other executives set up a series of off-balance-sheet entities known as "special purpose vehicles" (SPVs) to hide the company's debt and inflate its profits. These SPVs were used to transfer Enron's risky investments and liabilities to them, so they would not appear on the company's financial statements. This allowed Enron to present itself as a financially stable and successful company, even as it was actually losing money and facing serious financial problems.
The film also examines the role of Arthur Andersen, the accounting firm that was responsible for auditing Enron's financial statements. Despite knowing about the company's fraudulent activities, Arthur Andersen chose to turn a blind eye and go along with the deception. This ultimately led to the firm's downfall and the destruction of thousands of jobs.
The Enron scandal had far-reaching consequences beyond the company itself. It shook investor confidence and contributed to the stock market downturn that began in 2000. It also led to increased scrutiny of corporate governance and accounting practices, resulting in the passage of new laws and regulations designed to prevent similar scandals from occurring in the future.
Overall, Enron: The Smartest Guys in the Room is a thought-provoking and insightful look at one of the biggest corporate scandals in history. It serves as a cautionary tale about the dangers of corporate greed and the need for greater accountability and transparency in the business world.
