This film about Corp., an American energy, commodities and services company based in Houston, , documented one of the biggest business scandals in history. It featured the different executives who were involved in the graft and corruption that took place in the business. The documentary also featured Enron�s founder and chairman �s humble beginnings and his rise to fame and fortune. I realized how far he has gone from delivering newspapers and mowing lawns to being the founder of Enron and a successful businessman, but not for long. Enron�s chief executive at that time, Louis Borget, was getting money from the company and transferring it to a private account. Of course, Lay was a part of this, even encouraging Borget to make them more money. But when Borget was found out, Lay eventually denied it. Greed and other sinsAccording to the documentary, Kenneth Lay hired Jeff Skilling to be the new chief executive of the corporation who utilized the mark-to-market . When he did this, I knew right away that this opened the door to and corruption because it allowed the company to write the amount of money potentially earned in projects when the deal is signed even if there is no assurance that it will be successful. True enough, most of the executives and even traders took this new accounting style opportunity to earn more money, or more like steal more money. This went on and on for years, making those involved even more filthy rich. They did not think of the stakeholders of the company, its customers and investors.� Instead, they just thought of themselves. It was as if their main goal was to keep the stock prices up, so as to get more money, to the point where they were putting any amount of money in their books to make this possible. It shocked me the way they manipulated people just to get what they wanted. Their greed, pride, the lies they told, it was all surprising how human beings were capable of doing such things. What was most affecting was that they were making a big impact on people�s lives, and not in a good way. There was a part in the documentary wherein they featured what happened in the California energy crisis. California experienced multiple rolling blackouts not because of a lack of supply, but because of the market system that was manipulated by the executives and traders in Enron itself. Their goal was to keep California in crisis so as to increase their stocks. And this was exactly what happened. They got to sell power at premium prices, not letting the people know that there was, in fact, enough energy to supply California. They did not care about the lives affected because of the rolling blackouts; it did not bother them that those living there were having a hard time because of not having electricity during the winter. Enron traders intentionally encouraged the removal of power from the market by telling the suppliers to shut down plants. Pork barrel scam After watching the documentary, what bothered me the most was the fact that the same situation may be happening to our country, too. It may not be the exact same issue, but the graft and corruption taking place is the same. The most recent scandal taking place in our country is the Priority Development Assistance Fund scam, also called the pork barrel scam. In our country, members of Congress are entitled to a lump-sum discretionary fund, i.e., the pork barrel fund, that they will allocate for the different projects they prioritize for the benefit of our country. But just like what happened to Enron, this just opened the door to graft and corruption. Political officials allegedly started to get portions of the fund for personal use, and it did not matter to them whether or not their projects will finish successfully. Janet Lim-Napoles, the scam�s alleged mastermind, was claimed to have used funds from the pork barrel and has defrauded the government of P10 billion for the past 10 years. It was also claimed that she implemented ghost projects of at least 20 fake NGOs. The reason we have knowledge of this is because one of the people working for her, Benhur Luy, has decided to whistle blow and tell the truth. The biggest question now is how can this be solved and later on avoided?� How can so much greed and pride be present in our surroundings? To the extent where even our politicians, who ideally have to act as role models and good examples, are the ones who are supposedly included in such scams! It surprises me even more that those officials who have been caught for corruption already, like Estrada and Enrile, are still in position.Ensuring ethics and governance What actions must be taken place now? Shouldn�t the people realize that these officials being elected are also the ones stealing our money through taxes? I may not be a worker, but I too pay tax whenever I eat in restaurants or buy things, and it upsets me to know that instead of spending the taxes in helpful projects like better roads, infrastructures, poverty, pollution and the like, they go to the pockets of these people who do not even give a care in the world! As a student, I will make it a point to dedicate myself to corporate social responsibility by thinking of others first before myself. We should develop our passion for serving people and not our passion for money and material things. I know it seems like a long shot now because the scam is so fresh and new, but someday, I just hope our system will improve. This should not be tolerated. Graft and corruption in our country has been happening for too long. I hope this time it will be different. I hope this time, justice will be served and those who are involved will face the consequences they should face. And when it is my generation�s time to serve, all I can do is to hope that the system will be altered. I believe we know more now because we can learn from the mistakes these people have committed. Unlike the Enron and PDAF scam, corporate governance and ethics will be present in all our endeavors. The author is a student of the De La Salle University�s Ramon V. del Rosario College of Business. She is currently on her 2nd year taking up BS in Business Management. She maintains a First Honors Dean�s List standing. This is her reaction paper on the Enron Documentary submitted for the course Corporate Social Responsibility and Governance. Enron: The Smartest Guys in the Room (documentary) MOVIE REVIEW Enron: The Smartest Guys in the Room (documentary) by Eric D. Snider Grade: B

Released: April 22, 2005

Directed by:  Alex Gibney Cast:  John Beard  Jim Chanos  Carol Coale  Peter Coyote   Reggie Dees II  Joseph Dunn  Max Eberts  Peter Elkind   David Freeman  Philip Hilder  Al Kaseweter  Ken Lay  Bill Lerach  Loretta Lynch  Amanda Martin-Brock  Bethany McLean  Mike Muckleroy  Reverend James Nutter  John Olson  Lou L. Pai  Kevin Phillips  David V. Porter  Nancy Rapoport

Movies like “Enron: The Smartest Guys in the Room” are useful because they explain complicated issues in simple terms – a boon to us normal folks who are often frustrated by news coverage of ongoing stories that fails to take into account that we’re not all financiers or political scientists.

I remember being discouraged by the specifically, not because I was angry at the criminality involved, but because I had no idea what, exactly, anyone had done wrong. All I knew was that I was supposed to be outraged by it. I had never heard of Enron until the scandal broke, and even then I didn’t know what sort of business it was. (Department store? Candy factory?)

“Enron: The Smartest Guys in the Room” boils it down and tells the story in clear terms, but make no mistake: It’s still a complex issue. Even the film’s audience-friendly method of analysis requires that you pay attention. It’s been simplified, but not dumbed-down. It may be that what Enron was up to was so byzantine, it CAN’T be dumbed-down.

It is, as Bethany McLean tells us, “a story about people. It’s really a human tragedy.” McLean and Peter Elkind wrote the book on which the film is based, and they appear on-camera to explain what happened, aided by Peter Coyote’s slightly smug-sounding narration. Documentarian Alex Gibney wrote and directed it.

Ken Lay’s father was a Baptist minister (“Son of a Preacher Man” plays on the soundtrack, one of several amusing uses of apropos pop music) and Ken himself was a strong-headed businessman who pushed for the deregulation of public utilities. That is to say, he wanted electricity and natural gas to be bought and sold like any other commodities, with providers vying for customers and charging what the market will bear.

He got his wish, of course, and Enron thrived. With Lay as its chairman and the devilishly shrewd Jeffrey Skilling as president, Enron’s stock price soared in the 1990s. What the company counted on was the very thing that stymied observers like myself after the fact: No one really understood how Enron operated or how it made money. Even smart people took the even-smarter Jeffrey Skilling’s word for it that the company was profitable, too intimidated to ask the tough questions until it was too late. Someone in the film observes that not only was Enron a house of cards, but the house of cards was “built over a pool of gasoline,” too. What Enron was doing, essentially, was cooking the books. The company’s accounting firm, , let them use an arcane method of accounting known as “mark to market,” whereby a company declares its POTENTIAL profit as its ACTUAL profit, even if the deal in question winds up failing completely. In other words, I buy a thousand Beanie Babies from you for $10, knowing I can sell them on eBay for a total of $1,000,000. Under “mark to market” accounting, I declare a million dollars as my profit – even though, on the way home from your house, my car falls in the river and the Beanie Babies are lost forever. If you’re alarmed that Arthur Andersen signed off on this practice, you’re not alone: You may recall that things did not end well for Arthur Andersen, legally speaking.

But that’s not all. Enron’s staff of go-getter stock salesmen, the sort of alpha males depicted in the film “Boiler Room,” convinced hundreds of ordinary people to invest in the company, thus inflating Enron’s stock price to a value that was far greater than what the company was actually worth if one examined its actual assets. Once it became apparent that Enron’s emperor was buck naked, its stock prices plummeted to what they were really worth – as low as a few nickels per share – and everyone who had invested in it lost everything. The question that will face Lay and Skilling when they are put on trial in 2006 is: How much did they know, and when did they know it? Both have already insisted, with earnest-looking faces and sad eyes, that they had NO IDEA their hirelings were engaged in such shady practices as faking an energy crisis in California in order to drive up electricity prices. The movie, which makes no pretense of being fair or balanced, relentlessly seeks to prove that such claims of ignorance are false.

There’s no question that anyone who sees the film will consider Lay and Skilling guilty as charged; the fact that they and others escaped with multi-million-dollar “severance packages” when the company filed for bankruptcy while all their employees got nothing certainly proves they are guilty of being bastards, if nothing else. But they’re probably guilty of a lot more than that, too. I’m just glad I understand it all now. ENRON: THE SMARTEST GUYS IN THE ROOM (2005)

This documentary, made by Alex Gibney in association with the HDNet cable channel, tells the story of the rise and fall of Enron, the most spectacularly crooked corporation of modern times. It's based on the book The Smartest Guys In The Room: the Amazing Rise and Scandalous Fall of Enron by Bethany McLean and Peter Elkind. The story is told party by a narrator (Peter Coyote), but even more by talking-head interviews with reporters and insiders who know the story. McLean and Elkind act more or less as additional narrators. Other key expositors are Bill Lerach (attorney for Enron shareholders), Mike Muckleroy (Enron executive who was with the company from its early years), Amanda Martin-Brock (Enron executive who worked closely with Jeff Skilling), whistleblower Sherron Watkins (an Enron vice-president), and former Republican Party strategist Kevin Phillips. Many others contribute additional portions -- journalists, power traders, accountants, lawyers, stock analysts, and so on -- both investigators and insiders.

In style, the film is a generic documentary, with nothing to make it stand out very much except the material presented. No distinctively personal style or sense of humor in the manner of Michael Moore, no soothingly graceful aesthetics a la Ken Burns... and equally, no reality-television false dramatics, a minimum of MTVish visual noise, and best of all, no heavy-handed bludgeoning propaganda like some of the countless Michael Moore wannabes who've popped up over the last two years. The introductory section has an interestingly arty edge, but after the opening credits, it relies almost entirely on the content to create its impact.

It would have been easy to waste time on railing at how rotten these guys are, or hammering home the point of how crooked their tricks are, but they wisely avoid that temptation. There's a rule that fiction authors are taught (if they're lucky): "Show, don't tell." If you want to communicate that a character is, for example, a coward, one shouldn't just say so, one should show the character engaging in concrete cowardly acts. The film uses this technique to establish the characters of Ken Lay and Jeff Skilling, the Enron bosses: it shows them constantly lying. It was rare to ever hear a truly honest sentence from either of them. I tried to count the lies told by Skilling and Lay on camera, like Joe Bob Briggs counting breasts and quarts of blood in cheap horror movies, and got up to about fifty before giving up due to the impossibility of separating one lie from another, or deciding what to