Enron: The Smartest Guys in the Room

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Movie
German title Enron: The Smartest Guys in the Room
Original title Enron: The Smartest Guys in the Room
Country of production United States
original language English
Publishing year 2005
length 109 minutes
Rod
Director Alex Gibney
script Bethany McLean
Peter Elkin
Alex Gibney
music Matthew Hauser
Marilyn Manson
Tom Waits
camera Maryse Alberti
cut Alison Ellwood
occupation

Enron - The Smartest Guys in the Room is a documentary about one of the largest corporate bankruptcies in US economic history and its causes. The documentary , published in 2005, is based on a book by Bethany McLean and Peter Elkind. Both are named as authors in the credits of the film along with director Alex Gibney . In 2008 the original DVD was released with German subtitles.

The responsible managers of the US energy giant Enron enriched themselves through consistent balance sheet fraud and in 2001 brought about one of the largest bankruptcies in economic history, which destroyed over 20,000 jobs and, among other things, the employee pension fund worth over two billion dollars. The film deals with the collapse caused by extensive accounting fraud by the responsible managers. The film also shows the company's involvement in the California electricity crisis. It includes interviews with authors McLean and Elkind, former Enron executives, Enron brokers, analysts, journalists, former California Governor Gray Davis , and includes company recordings of staff meetings as well as original recordings from the post-bankrupt hearings.

The film won the Independent Spirit Awards in 2006 for best documentary and was nominated for an Oscar in 2006.

action

The career and scandals of Kenneth Lay , who founded Enron in 1985, are shown against the backdrop of the hearing that was later conducted . Just two years after it was founded, Enron was embroiled in a scandal when two securities dealers made risky deals on the oil market with company money . It is also reported that Enron's CEO, Louis Borget, was diverting corporate funds to an offshore financial center . When these machinations were not uncovered during an audit , Kenneth Lay encouraged his employees to "rake in more billions". After it was found that Enron's reserves were at risk and the company was on the verge of bankruptcy, employees, including Louis Borget, were fired and sentenced to prison terms for breach of trust. Although he was aware of the extremely risky business, Kenneth Lay denied any involvement in the scandal.

Kenneth Lay then hired a new CEO , Jeffrey Skilling , to see Enron transform itself from an energy producer into a company that acted like a trader in the commodity markets of energy, especially natural gas. He wanted to buy and sell natural gas like a stock-like product. Above all, however, he ensured that certain projects were re-evaluated on the balance sheet and, above all, more highly valued (“ mark to market ”). Long-term expected income was reported as existing income immediately after the contract was signed, debts appeared in the books as assets and investments in material projects were supposedly paying off before they were even realized. This enabled Enron to subjectively appear to be a highly profitable company.

The film meticulously describes how Skilling forced his social Darwinian view of corporate governance on Enron when he set up an in-house review committee. This had the target of dismissing 15% of the employees annually. For this purpose, the employees were rated in terms of their productivity and then the weakest were fired, who were judged to be inadequate to achieve the company's goals. This led to strong competitive thinking in the company and an extremely bad working atmosphere.

Skilling hired so-called "lieutenants" who pushed through the implementation of his instructions in the company. They were called "the guys with the spikes" internally. These included J. Clifford Baxter, a manager known as manic-depressive, and Lou Pai, CEO of Enron Energy Services. Pai was known for using company money to regularly pay for visits to strip clubs and allegedly even inviting strippers into his office. Pai sold his shares for $ 250 million and then unexpectedly left the company. Regardless of the amount Pai took in, the subsidiary he ran made a $ 1 billion loss - a fact that was covered by Enron. Pai used his money to buy a large ranch in Colorado , making it the second largest landowner in the state.

While the prices rose on the stock market due to the Internet bubble , Enron tried to deceive the analysts by achieving the quarterly targets. Managers pushed the price and then silvered their stock options in a process they called “pump and dump”.

Enron is also launching a huge PR campaign in which the company presented itself as profitable and stable even though its global business was poor. The establishment of the "Dabhol Power Plant", a power generator in India , was a huge misjudgment . This operation was later shut down and about a billion dollars was wasted when ultimately not enough electricity could be generated and no buyer was found for the electricity generated. Still, millions of dollars in bonus payments were made to senior executives based on the whitewashed sales figures.

In addition, Enron invested in broadband technology to sell films and in the sale of weather reports ; these commitments also failed. Nevertheless, non-existent profits continued to be shown on the balance sheet due to the appreciation of the assets .

Enron's success came at its peak when it was named in 2000 as one of the Internet- based companies to survive the bursting of the dot-com bubble . It was also recognized by Fortune magazine as the "Most Reputed Company" company. Still, Jim Chanos, an investor, and Bethany McLean, a Fortune reporter, challenged that success because of irregularities in the company's financial reports and stock valuations. Skilling then called McLean's approach "unethical" and accused Fortune magazine that the report should counteract a positive representation in BusinessWeek . Nevertheless, the day after, a meeting with Andrew Fastow ( CFO ) and two other employees was arranged to resolve the disagreements with Bethany McLean. It was later discovered that Fastow invented a network of bogus companies that enabled him to lighten Enron for millions of dollars while disguising the company's debt without the knowledge of Lay or Skilling. Fastow also took advantage of the greed of investment banks like Citibank and Merrill Lynch , which he persuaded to invest in these bogus companies so that Enron could ultimately do business with itself. In the end, however, Enron was more than $ 30 billion in debt.

It is well documented how another scandal caused by Enron concerned the electricity crisis in 2000/2001. After the partial deregulation of the electricity market was decided in 1996, Enron knew how to use this for itself. With the purchase of "Portland General Electric", the largest Californian power generator was acquired and thus started producing electricity. However, as was already the case with natural gas, attempts were made in this area to trade electricity as a product like a share in order to drive up the price above all. Enron didn't just export power to other states when the price was high enough. They also deliberately cut down the production of their own power plants in order to drive prices even higher. In addition, bets were made on rising prices on the electricity market, as you could influence this yourself.

The film draws on original company documents and shows internal video recordings of employee meetings as well as tape recordings. This documents, among other things, how Jeffrey Skilling insulted an analyst during a conference call in April 2001, when the company was slowly getting closer. He had emphatically pointed out that Enron was the only American company that did not publish any information about its own cash assets.

The recordings are rounded off by individual scenes that are played, for example, depicting gambling situations and thus showing a parallelism to the information presented.

Awards

literature

  • Bethany McLean, Peter Elkind "The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron" - Portfolio Trade, 2004 - ISBN 1-59184-053-8
  • K. Eichenwald "Conspiracy of Fools: The Enron Scandal: A True Story" - Goldmann Verlag, 2007 - ISBN 3-442-15455-3
  • AN Hinz: "The Sarbanes-Oxley Act as a preventive and detection measure for fraudulent acts: An investigation against the background of the Enron collapse and other accounting scandals" - Diplomica Verlag, 2010 - ISBN 3-8366-8860-3

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