I had the opportunity recently to watch a screener DVD of the documentary movie Enron: The Smartest Guys In The Room, based on the book by the same name. It's a fairly comprehensive and snappy overview of the rise and fall of Enron, the players involved and the corporate culture they spawned. It's done in an interview-and-flashback style with subjects like book authors Bethany McLean and Peter Elkind, former Enron employees like whistleblowing VP Sherron Watkins, and various connected outsiders like Jim Chanos of Kynikos Associates, the analyst famously called an "asshole" by Jeff Skilling in a public conference call, and John Olsen, a former stock analyst for Merrill Lynch whose firing Andy Fastow forced when Lynch was about to give Enron's stock a "hold" rating.

There's some pretty strong material in this movie. A couple of internal videos, one of which features Jeff Skilling spoofing the concept of mark-to-market accounting (he called it "HFV", or "Hypothetical Future Value", and said the company stood to make "kazillions" by it) and another with Andy Fastow explaining why his stake in the LJM partnership would not be a conflict of interest, are particularly jaw-dropping. And there's a really poignant scene in which Portland General Electric lineman Al Kaseweter matter-of-factly states that he sold his entire retirement portfolio, which was worth $348,000 at its peak, for $1200.

Some of their story arcs felt incomplete to me. An early segment is on a scandal from 1987 involving Enron Oil, in which a couple of traders were getting inexplicably positive results from a series of risky trades, which the film likened to shooting craps. Former Enron employee Mike Muckleroy, who'd be on Central Casting's short list for "Veteran Texas Oil Man", is the key player in ferreting out the doubledealing and somehow saving the day for Enron. The details of what the traders were doing and how Muckleroy cleaned up after them are maddeningly unclear. We're told that these trades are hugely risky but the traders are making a killing, then we're told that they cooked the books but that Ken Lay had earlier told them to keep doing what they're doing because they were the only unit making money. Finally, we're told that they lost a $90 million gamble and after Muckleroy finally got to see the real accounting he "bluffed the market" and pulled their chestnuts out of the fire. I still can't make sense of what actually happened, and wish the filmmakers had taken the time to fill in a few blanks.

The point of this "prequel" was to show that early on Ken Lay knew that things were sometimes shifty at his company - Muckleroy emphatically confirms that Lay knew what was happening at Enron Oil because he told Lay himself. Much of the rest of the film, and especially the conversations with former insiders like onetime executive Amanda Martin-Brock, is spent on the question of what Lay and Skilling knew and when they knew it.

There's a big segment later on regarding the manipulation of California's energy markets. Former Governor Gray Davis and a couple of his state officials testify to how Enron took unfair and illegal advantage of them. I want to be sympathetic to that view, but it's a little self-serving of them to say so. This would have been a good place for an economist or legal expert to explain what it was about California that Enron was able to exploit like they did. We've all heard that California's deregulation laws were a mishmash of compromises. Was Enron just acting like any other hungry capitalist? It would have been nice to address that. Having said that, however, hearing the tapes of the traders leaves little doubt as to the morality involved.

There's a great bit towards the end. After Skilling suddenly resigned in 2001 for "personal reasons", Prudential analyst Carol Coale was going to downgrade Enron stock, but after interviewing Skilling she decided to believe him, and thus kept the "buy" rating intact. She admitted that he "spoke to the right analyst" and marveled at his acting skills. I thought that took guts to do, though it made me wish they had spoken to writers at the Houston Chronicle (such as former business columnist Jim Barlow, who was using trivia forwarded to him in email as the basis of a half-dozen or so columns a year towards the end of his term) to ask them how they missed what was going on at 1400 Smith Street.

Bottom line: This was a worthwhile movie to watch, and I believe it is accessible regardless of one's level of knowledge about Enron, but it left me wanting a little more. I suppose I need to read the book now so I can see what they left out. Oh, and they answered the eternal question about why Enron is associated with strippers. That in and of itself made it worth watching.

You can find out more about the film at their official movie blog. It opens on the 22nd here in Houston, which is pretty good timing given that the Enron Broadband trial is set to begin.