I was going to end being one of the losers who stayed at home on
Saturday night if it wasn't for Blanche who accompanied me to watch the
movie, Enron: The Smartest Guys in the Room. I have the opportunity to watch other movies, including The Hitchhiker's Guide to the Galaxy,
but I chose to watch this movie. I guess it is because I perceive this
movie as a big case study on management, so I was intrigued by it.
Contrary to what you might think, this movie isn't a political
documentary like Michael Moore's Fahrenheit 9/11. It is simply an
investigative documentary on white-collar crime. I find the 110 minutes
running time for the movie excessive long. Nonetheless, I still find
the movie enlightening. Therefore, my verdict for the movie is, watch
it if you have an appreciation for management or are curious to find
out what actually happen in Enron. Prior to the movie, I always had the
impression that Enron is just another good company gone bad. However,
the executives were con men right from the beginning. It was amazing
how they were able to get away with their accounting practices. One
tactic that they use was called Mark-to-Market, an accounting practice
that the SEC had approved at that time. Using Mark-to-Market, it means
that if Enron starts a venture that generates $100 million years from
now, they can claim that $100 million as income now. Enron executives
used this trick to conjure up numerous phantom ventures that reported
extravagant amount of revenues on their financials. I was even more
shocked to find that Balance Sheet and Cash Flows are not required by
the SEC for a company's earning report at that time. Do you also know
that the cause of the California energy crisis in 2001 can be traced
back to Enron? There are strong evidences that showed Enron power
stations in California deliberately withheld power back so that Enron
energy traders can overcharge California by selling electricity back to
the state. At the end, it is heart wrenching to see that the innocent
employees of Enron were left a worthless pension and without a job. In
closing, I am going to quote Roger Ebert on his conclusion for the
movie.
Strange, that there has not been more anger over the Enron scandals.
The cost was incalculable, not only in lives lost during the power
crisis, but in treasure: The state of California is suing for $6
billion in refunds for energy overcharges collected during the phony
crisis. If the crisis had been created by Al Qaeda, if terrorists had
shut down half of California's power plants, consider how we would
regard these same events. Yet the crisis, made possible because of
deregulation engineered by Enron's lobbyists, is still being blamed on
"too much regulation." If there was ever a corporation that needed more
regulation, that corporation was Enron.