Bonfire of the vanities

Morality tale of a big business run by small, small men, writes Victoria Segal

<strong>Enron: t

Before declaring bankruptcy amid a cyclone of scandal on 2 December 2001, Enron's advertising slogan was "Ask why". Ironically, however, Amer ica's seventh-biggest corporation - worth over $70bn before its collapse - fostered a culture in which the very notion of "asking why" was aberrant. An audiotape reveals its for-mer chief executive Jeffrey Skill ing calling an investor an "asshole" on a conference call, merely because he asked why nobody at the company could produce an actual balance sheet. When the Fortune magazine journalist Bethany McLean - a co-author of the book on which this film is based - asked Skilling "how does Enron make its money?" she was condescendingly ac-cused of naivety and "not doing her homework". Yet the questions persisted until Skilling, Enron's chairman Kenneth Lay and its chief financial officer Andrew Fastow could no longer dodge them, unleashing one of the greatest financial scandals in modern history.

Five years later, Alex Gibney's Oscar-nominated documentary refuses to halt the interrogation, asking how this cor-rupt corporate culture could encourage America's business honchos to drink their Kool-Aid with such greedy enthusiasm. To this end, Gibney intersperses his narrative with clips of American icons, from It's a Wonderful Life - "There's something funny going on over there at the bank" - to the Simpsons visiting an amusement park to travel on the Enron Ride of Broken Dreams, placing the scandal in a wider context of Stars-and-Stripes aspirations.

There are those who call Enron's col- lap se a human tragedy and for the rank-and-file employees - for example, the lineman who lost his pension and sold his stock for $400 - it probably was. About 20,000 employees lost jobs and medical insurance; $1.2bn in retirement funds and $2bn in pensions went missing. Yet top executives cashed in 116 million stock options just before the axe fell.

It's impossible to dignify the main players as lofty beings at a remove from the white-collar squalor they left behind. There's Lay, known to George W Bush as Kenny Boy, shown making an appalling comment about 11 September 2001 just before Enron's collapse: "Just like America is under attack, I think we're under attack."

There's Lou Pai, the boss of an Enron subsidiary, who sold his stock to marry his stripper girlfriend and is now the second- biggest landowner in Colorado, and Fastow, Skilling's protégé - and main scapegoat. Finally, there's Skilling himself, who has the strange smooth features of a boy in a man's body - a fair reflection of his world-view. Asked during his admis-sions interview to Harvard whether he was smart, Skilling replied, "I'm fucking smart" - a presumptuous claim, considering he later ran his company in a way that would embarrass the kind of rulers who rename days of the week after their cats.

The overriding impression left by this film - narrated with dry panache by Peter Coyote - is that Enron was little more than the revenge of the nerds: clever, greasy-haired schoolboys vindicating years of having their heads flushed down the toilet after chess club. As anecdotes show, this was a place where workers thought "M Yass" was a suitable name for a phoney account holder and whose top brass bonded on ludicrously macho adventure holidays, the kind of trips that set off a big flashing neon sign reading "overcompensation". The corporate culture was soaked in misplaced testosterone (it seems oddly telling that the principal whistle-blower, vice-president Sherron Wat kins, was female). Workers were graded one to five, on the humiliating understand-ing that at least 10 per cent would be rated five and fired - a procedure called "rank and yank" - while the companies that Fastow created to hide debt were named Jedi and Raptors with geeky machismo.

If the nerds were in control, however, the jocks ran riot underneath. Gibney plays back the notorious audiotapes of traders talking during the California energy crisis, persuading power-plant owners to help them drive up prices and mocking an imaginary "Grandma Millie", forced to pay their high prices. This was an environment full of emotionally un qualified people so lacking in empathy and compassion that, for all their MBAs, they bred unethical behaviour. Gibney refers to Stanley Milgram's famed experiment on the nature of evil, positing that people are happy to perform increasingly immoral acts as long as they are sanctioned by authoritative scientists. Skilling and Lay were the ultimate men in white coats. Certainly it's no surprise that big corporations are not always scrupulously honest, yet Enron: the smartest guys in the room pinpoints a moment when corporate morality was shredded like so many tonnes of incriminating documents in a big business run by small, small men.

This article first appeared in the 01 May 2006 issue of the New Statesman, Wealth and terror