The smartest guys in the room
The Enron movie with that title is an interesting look at the Enron debacle which, while the not the largest corporate bankruptcy in US history (hello Worldcom), certainly ranks among the most outrageous.
The movie certainly works to incite a sense of outrage, particularly through the use of photos and videos of the key players (Lay, Fastow, Skilling) in particularly smug and vainglorious poses and moments.
What is more subtle and, in my opinion, more important, however, is how the whole thing came about. The movie correctly notes that no one started Enron with the idea of screwing 20,000 employees, and countless pension funds; a combination of ignorance and arrogance created a toxic cocktail fuelled by hubris and an inability to recognize that mistakes were made.
What ultimately allowed the Enron scandal to go on for so long was active complicity on the part of some players and just plain stupidity on the part of others. Enron succeeded because of its political connections (Lay was close with Bush Sr. and, to a lesser extent, Bush Jr. though the movie omits the fact that most of the fraud was engineered under the Clinton administration, blowing up 8 months after Clinton left office), its complicit accountants and lawyers (who profited handsomely through large billings and additional work), the banks (who loaned more money to Enron even when warnings signs were all over the place; and why did Merrill Lynch need Nigerian oil barges anyway?), the SEC (who, until Spitzer came along, didn't see much point in enforcing anything), etc... California is portrayed as a victim of greedy Enron traders, but one has to ask a) how can a state lose control over its own power plants and b) how does an energy trading company get to order power plants to shut down? As well, the botched deregulation rules make California look stupid as much as they make Enron look greedy.
At the end of the day, however, it was a mix of all those conditions that allowed Enron to do what it did. No company operates in a vacuum and Enron's accounting could have been figured out by a high-school student had anyone bothered to ask. Enron played its villain part well by bullying analysts and reporters who asked too many questions (or didn't bow down far enough) and by allowing its executives to cash out while simultaneously goading everyone else to buy the company's stock. At any one point, someone could have stood up and asked a tough question, or refused to allow such shenanigans to continue. But pride and ego do not yield lightly and admitting that even the "smartest guys" made a mistake is a pill that is far too bitter to swallow.
What discourages me, however, is that dozens of mini-Enrons are in the works as we speak. It's all part of a culture that rewards getting rich over doing what is right. When faced with a dilemma, the question should be "Is this right?" instead of "Can I get rich?" So long as Ken Lay can keep his million and Jennifer Wilbanks can make a half-million dollars for being an idiot, such scandals will be part of our landscape for years to come.
The movie certainly works to incite a sense of outrage, particularly through the use of photos and videos of the key players (Lay, Fastow, Skilling) in particularly smug and vainglorious poses and moments.
What is more subtle and, in my opinion, more important, however, is how the whole thing came about. The movie correctly notes that no one started Enron with the idea of screwing 20,000 employees, and countless pension funds; a combination of ignorance and arrogance created a toxic cocktail fuelled by hubris and an inability to recognize that mistakes were made.
What ultimately allowed the Enron scandal to go on for so long was active complicity on the part of some players and just plain stupidity on the part of others. Enron succeeded because of its political connections (Lay was close with Bush Sr. and, to a lesser extent, Bush Jr. though the movie omits the fact that most of the fraud was engineered under the Clinton administration, blowing up 8 months after Clinton left office), its complicit accountants and lawyers (who profited handsomely through large billings and additional work), the banks (who loaned more money to Enron even when warnings signs were all over the place; and why did Merrill Lynch need Nigerian oil barges anyway?), the SEC (who, until Spitzer came along, didn't see much point in enforcing anything), etc... California is portrayed as a victim of greedy Enron traders, but one has to ask a) how can a state lose control over its own power plants and b) how does an energy trading company get to order power plants to shut down? As well, the botched deregulation rules make California look stupid as much as they make Enron look greedy.
At the end of the day, however, it was a mix of all those conditions that allowed Enron to do what it did. No company operates in a vacuum and Enron's accounting could have been figured out by a high-school student had anyone bothered to ask. Enron played its villain part well by bullying analysts and reporters who asked too many questions (or didn't bow down far enough) and by allowing its executives to cash out while simultaneously goading everyone else to buy the company's stock. At any one point, someone could have stood up and asked a tough question, or refused to allow such shenanigans to continue. But pride and ego do not yield lightly and admitting that even the "smartest guys" made a mistake is a pill that is far too bitter to swallow.
What discourages me, however, is that dozens of mini-Enrons are in the works as we speak. It's all part of a culture that rewards getting rich over doing what is right. When faced with a dilemma, the question should be "Is this right?" instead of "Can I get rich?" So long as Ken Lay can keep his million and Jennifer Wilbanks can make a half-million dollars for being an idiot, such scandals will be part of our landscape for years to come.
