BEFORE: More fun with archive footage tonight - several politicians carry over from "Joan Didion: The Center Will Not Hold", but let's highlight the most outrageous one - Arnold Schwarzenegger.
THE PLOT: A documentary about the Enron corporation, its faulty and corrupt business practices, and how they led to its fall.
AFTER: The summer/Southern theme continues since the focus tonight is back on Houston, where Enron was based. There's also part of the film that takes place in California, once Enron gets a financial foothold in that state's energy market, so there's summer brown-outs and wildfires that all factor in to the success and eventual failure of Enron's corporate strategy. Last night the Didions were holding beach parties in Malibu, and today I'm watching Gov. Gray Davis get recalled in part because of those brown-outs, and Arnold Schwarzenegger taking over as governor. I had no idea that whole mess could be traced back to Enron's shady business model.
It's a bit hard for someone who's not a forensic accountant to follow it all - basically Enron was in the energy trading game, getting energy from the places where there was too much and somehow delivering it to the places that needed it. Umm, I think? And then charging a premium when they did that. Any deregulation of the energy industry by a President who happened to be a friend of Kenneth Lay, or a recipient of his campaign contributions, that's just a coincidence, right? Sure....
From there, the company embarked on a "fake it till you make it" strategy, issuing and leveraging stock, basically betting that the price of energy would rise while also being the ones setting the price of that energy. Umm, I think? And then convincing everyone, even their own employees, to buy more stock in the company because it was clearly undervalued, while also knowing that if they could convince people to buy more stock, that would in fact drive the value up. Come on, who needs a 401K or a pension fund, Enron stock is a sure thing, right? Because the stock market always goes up over time, if you don't count those little market corrections that happen from time to time and also caused Black Friday and the Great Depression.
I'm sure the company did well legitimately for a while, it did have a modest rate of growth slightly better than the national average. That I can believe, but then came the push to do better, charge more, tout the profits and hide the losses via various shell companies - phony businesses that were owned by Enron's CFO that did fake transactions, ones which shuttled the losses over to other entities so only profits would show up on Enron's books. The use of "mark-to-market" accounting meant that everything was based on what the market value of the company was, which coincidentally the executives also arbitrarily determined. Profits were "whatever we say they are" or "whatever we need them to be" in order to get more people to invest in stock.
What's crazy is that once they started accelerating profits, the executives found that they had to keep doing that, because every time they claimed more income, that raised expectations even more for the next quarter, and the next, and so on. So there was more impetus to go into new fake markets and expand into new fake ventures just to make more fake money, or something. Here's the crazy part, Enron wanted to go into business with Blockbuster Video in 2001 to provide streaming movies to people across the country via the internet! Which is crazy, because who the hell wanted to stream movies back before they could stream movies? Somebody had a vision of the future that ended up being accurate, only they couldn't quite make it happen, and they were only interested in making it a thing because it was potentially profitable, not because they loved provided people access to movies. But I guess a streaming movie is a form of energy, somehow?
Then they had some crazy idea to trade weather, because weather is also a form of energy (?) but I can't for the life of me see how they were going to do this or profit by it - were they going to take the rainclouds from Seattle and somehow bring them to Las Vegas or buy up the snow in Minnesota and truck it down to Florida? I think by this time the writing was probably on the wall and they were just saying crazy things that weren't possible, then even crazier things because deep down they wanted to get caught for making insane amounts of money for the executives and getting ready to lay off all their employees without severance pay. But I'd have to check the timeline on that.
As for the executives, they did whatever they could to increase short-term profits within particular time frames so they'd get performance bonuses, meanwhile they were taking all of their stock options and cashing them out whenever the stock price reached high levels, so they'd essentially get rich while advising all the lesser employees and investors to keep holding on to the stock and ride out the lows in the market, because these things always go up again, right?
The company survived as long as it did because of California, whatever losses in other markets there were that couldn't be hidden by transferring them to shell companies could be made up for by profits in California. Deregulation of the energy markets meant that Enron could charge more in California, especially when demand went up. And they made demand go up by causing these brownouts, and the brownouts came from shutting down several power plants at the same time for phony maintenance, repairs, or bogus emergencies. Wildfires near the plants helped, too, so that leads to questions about whether those fires were intentionally set, I suppose.
The terrorist attack on September 11, 2001 was something of a blessing for Enron, it took speculation about their corporate practices out of the headlines - yet CEO Ken Lay still had the nerve to compare the WTC attack in New York with the SEC "attacking" Enron to investigate their shady accounting. So, yeah, there's probably a special place in hell for Ken Lay, here's hoping. By this time the company had watched both its stock price and its credit rating fall, at that point the only option was to file for bankruptcy and wait for the congressional hearings to start. Enron also took down Arthur Andersen, the noted accounting firm that happily got paid each week to not notice all the terrible things on Enron's balance sheet.
Ken Lay and Jeff Skilling went on trial in 2006 for a host of charges including securities fraud, money laundering, insider trading and conspiracy. Skilling was sentenced to 24 years in prison, but got 10 knocked off. Lay was on the hook for up to 45 years, but then conveniently died before sentencing. Even in death, the consummate asshole, he wouldn't even let anyone get the satisfaction of seeing him suffer, no, he was too good for that. The only good news, that followed later, is that there were successful class-action suits that returned at least some money to the investors and the people who lost their pension funds.
The approach here is fairly matter-of-fact, "talking heads" style. But then they dropped in footage of strippers, like the ones that Lou Pai used to hire for private dances. It almost seems like this is the sort of documentary they were making fun of when they made "The Big Short".
Also starring John Beard, James Chanos, Carol Coale, Gray Davis, Joseph Dunn, Max Eberts, Peter Elkind, David Freeman, Philip Hilder, Bill Lerach, Joe Lingold, Loretta Lynch, Amanda Martin-Brock, Bethany McLean, Mike Muckleroy, James Nutter, John Olson, Kevin Phillips, Nancy Rapoport, Harvey Rosenfield, Mimi Swartz, Sherron Watkins, Andrew Weissman, Colin Whitehead, Charles Wickman, with narration from Peter Coyote (last seen in "Hemingway & Gellhorn")
and archive footage of Kenneth Lay, Jeff Skilling, Andrew Fastow, Lou Pai, Tim Belden, Sen. Barbara Boxer, George H.W. Bush (also carrying over from "Joan Didion: The Center Will Not Hold"), Barbara Bush (ditto), Dick Cheney (ditto), Ronald Reagan (ditto), George W. Bush (last seen in "Koch"), Laura Bush (last seen in "Quincy"), Bill Clinton (last seen in "13th"), Sen. Peter Fitzgerald, Rep. Jim Greenwood, Sen. Fritz Hollings, Linda Lay, Jay Leno (last seen in "I Am Big Bird: The Carroll Spinney Story"), Sen. Carl Levin, Maria Shriver (last seen in "The Front Runner"), Rep. Cliff Stearns, Rep. Ted Strickland, Sen. Henry Waxman, Sen. Ron Wyden, James Stewart (last seen in "You Can't Take It With You"), Donna Reed (last seen in "Shadow of the Thin Man").
RATING: 6 out of 10 paper shredders
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