Enron: The Smartest Guys in the Room (7/10)

by Tony Medley

This is interesting, which is why I give it a positive rating because the primary purpose of a movie is to be entertaining. Unfortunately, it is a politically biased polemic in the mode of Michael Moore.

The film has extensive clips of Enron CEO Jeff Skilling, who comes across as insufferably arrogant. Most of the clips are from his testimony before Congress, which I watched. Also shown are clips and interviews with Andrew Fastow, who ran all the limited partnerships that apparently hid Enron’s losses, Ken Lay, Enron’s Chairman of the Board, Sharon Watkins, the V.P. of corporate development-turned whistle blower, and Gray Davis, former Governor of California, among others.

Davis is presented as a sympathetic victim. He was a victim, but not so much of Enron as of his predecessor, Pete Wilson, the California State Legislature during Wilson’s tenure, and, most of all, of Steve Peace. Who is Steve Peace? Steve Peace is the State Senator who wrote the California electric deregulation law that went into effect in 1996. I well remember the day the law was passed and thought, at the time, it was a singularly dumb piece of legislation, not at all in the public interest. The price of electricity had been controlled since the days of Thomas Edison and was an unbelievable bargain. It was available, and cheap, and the electric industry made good profits, even though it was totally controlled by the Public Utilities Commission. Why change it if it’s not broke?

Peace wrote the law himself, with the help of San Diego Gas & Electric. Nobody in the Legislature read it or understood it. I remember reading a quote from one  of the state legislators who voted for it. “Nobody understood it,” he said. “Nobody read it. But we all relied on Steve because he was so smart.” So they passed it, relying on Peace. It was a disaster. Fast forward to Davis. At the turn of the millennium he’s faced with horrible electric outages, which were basically the result of two things, the deregulation law and manipulation by Enron traders. What does Davis do? Of all the people available in the world, he hires Steve Peace as his Director of Finance; the guy who was responsible, more than anyone else, for the destruction of the California electric industry and the mess in which Davis found himself! I guess to reward him for the job he did on California electricity Davis figured this is the guy to pull California out of the financial mess into which it had fallen as a result of Peace’s law by bringing him as his top financial guy. If only on this decision alone, Davis deserved to be recalled.

Why do I go into all this? Because this film never mentions the name of Steve Peace. How can you tell the story of Enron and its traders, and they way they raped California without telling the story of Steve Peace, the guy most responsible? Without Peace’s law, the main story of this film would not have occurred. But if you bring Peace into the story, Davis doesn’t look so good. Further, it’s far more difficult to blame Bush.

So the film is not really trying to tell the objective story of Enron, it’s a politically biased tome with George Bush as the devil. The film tries to tie the Bushes in to Lay by showing each saying nice things about him. But Bill Clinton said nice things about Lay, too, and at a time when something might have been done. But we don’t see much of Bill in this, and don’t see anything of him that might make it look as if he were in cahoots with Lay and Enron, as it does with the Bushes. In fact, all politicians were courting Lay because Enron was flying high and was dispensing lots of money to candidates. It wasn’t just the Bushes. And it wasn’t just Republicans. But that’s the incorrect conclusion you’d reach if you took this film as Gospel.

The film can also be accused of taking a pretty cheap shot at Skilling, who was an attractive and easy target because of his position and arrogance. It’s entirely possible that Skilling knew everything that was going on and is culpable. But it’s also possible that he didn’t know what the Enron traders were doing with the California energy market. He was the CEO, true, but it’s conceivable that the traders were off in their own world and that Skilling was ignorant of the actions the traders were taking to manipulate the energy market in California. If you’ve ever worked for a major corporation, and I have, you know that it’s possible for underlings to do things and hide them from those in charge.

This film is an excellent example of the truism that history is not made by those who do the acts, but by those who write the story. Too bad, because the Enron story is a fascinating tale. Maybe somebody honest and objective will tell it someday.

May 24, 2005