Based on the book co-authored by Fortune magazine writers, Bethany McLean and Peter Elkind, this documentary exposes the corporate corruption behind the rise and fall of the former Houston, Texas based energy corporation, Enron. Founded in 1985 by economist, Kenneth Lay, a man who was one of the highest paid executives in corporate America, the company rose to number 7 on the Fortune 500 list with it’s border to border and coast to coast gas pipeline. Enron’s real muscle was their energy trading business, which was driven by both greed and testosterone. The filmmakers use tape recordings of Enron traders who are elated with how rich they were getting during the rolling blackouts in the state of California in 2000.
Another key player in the Enron scandal is former CEO and President, Jeffrey Skilling, a slick salesman and confidence man with a Harvard MBA who was a believer in “big, new ideas” and was quite capable of selling them to Wall Street investment bankers and securities analysts. While on a conference call with market analysts and reporters, a financier asks Skilling why Enron is the only institution that can’t come up with a cash flow statement or balance sheet after earnings are reported? Skilling thanks the man and then calls him an asshole, making news in all of the financial trade publications and questioning his ability to run Enron. After being CEO for the firm for only six months, Skilling resigns unexpectedly in August of 2001, assuring employees and investors that Enron is in excellent shape financially and that his reason for leaving is strictly personal. In December of 2001, Enron filed for federal bankruptcy protection.
The third key player in the downfall of Enron, and perhaps the most devious, was former Chief Financial Officer, Andrew Fastow. As a young banker in Chicago, Fastow developed dynamic strategies for reducing company debt via public stock offerings and other securities. Essentially, Fastow created an elaborate labyrinth of shell companies and investment vehicles that allowed Enron’s quarterly earnings and stock price to always increase. In essence, they were borrowing from Peter to pay Paul, or in the case of Enron, to pay Ken Lay, Jeff Skilling and Andrew Fastow. Each of these men sold hundreds of millions in Enron stock options for their own personal gain, knowing that the revenues and profits of the company were nothing more than financial phantoms. Thousands of Enron employees lost their jobs and their retirement plans were left empty with worthless shares of Enron stock.
One of the good people in the story is former Enron Vice President, Sherron Watkins, whose infamous “smoking gun” memo to Ken Lay outlines her concerns about internal accounting scandals that could implode the company. Her testimony in the Enron congressional hearings were most damaging to Skilling and Lay, who both go on trial in 2006. Ms. Watkins tells her story in a book appropriately titled, “Power Failure.”
The documentary is directed and produced by Alex Gibney, whose previous non-fiction films include the blues doc, Lightning in a Bottle and The Trials of Henry Kissinger. Producers for the film include HDNet, a company that specializes in projects shot in high definition video with budgets up to $2 million, and Magnolia Pictures, a division of Todd Wagner’s and Mark Cuban’s 2929 Entertainment, whose previous documentaries include Capturing the Friedmans and Control Room. The film premiered in Houston and New York City on Friday, April 24th. It is a sobering tale of corporate corruption and personal greed that is presented in a professional, hard news fashion that is well worth the price of admission.