Enron: The Smartest Guys in the Room

Enron: The Smartest Guys in the Room tells the inside story of the spectacular rise and fall of Enron Corporation, one of the most infamous corporate scandals in American history. It recounts how the Houston-based energy company, once hailed as America’s most innovative corporation, collapsed into bankruptcy in 2001, revealing a web of fraud, corruption, and deceit.

The documentary traces Enron’s origins from its formation in 1985 through its meteoric rise in the 1990s, fueled by deregulation in the energy sector and creative accounting practices. It introduces key figures such as Kenneth Lay, the company’s founder and chairman, and Jeffrey Skilling, the charismatic CEO who championed Enron’s aggressive growth strategy.

At the heart of the story is Enron’s use of mark-to-market accounting, which allowed the company to book future profits immediately, regardless of whether those profits ever materialized. This practice, combined with the creation of off-balance-sheet entities known as “special purpose vehicles,” enabled Enron to hide billions of dollars in debt and losses from investors and regulators.

The film details how Enron’s culture of greed and hubris permeated the company, encouraging risky trading practices and unethical behavior. It highlights the role of CFO Andrew Fastow, who masterminded many of the company’s most complex financial schemes, including the infamous “Raptor” transactions that were used to conceal Enron’s mounting losses.

As Enron’s stock price soared, executives reaped enormous personal gains through stock options and bonuses. Meanwhile, the company engaged in market manipulation, most notably during the California energy crisis of 2000-2001, when Enron traders deliberately created artificial shortages to drive up prices.

The documentary also examines the complicity of external parties, including Enron’s auditor, Arthur Andersen, which turned a blind eye to the company’s questionable accounting practices. Wall Street analysts and investment banks are shown to have played a role in perpetuating the Enron myth, silencing skeptics and promoting the company’s stock even as evidence of its financial troubles mounted.

The film concludes with the company’s dramatic collapse in late 2001, as revelations of its accounting fraud came to light. It depicts the human cost of the scandal, including thousands of Enron employees who lost their jobs and life savings, and the broader impact on public trust in corporate America.