It also explores the strong political connections Ken Lay and Enron had, particularly to the administrations of 41st President George H. Fastow eventually pleads guilty in a deal that he will testify against his former coworkers in exchange for a reduced sentence, while Lay and Skilling plea innocent and spend tens of millions of dollars on defense attorneys.
CFO Andrew Fastow creates a network of shell companies designed solely to do business with Enron, for the ostensible dual purposes of sending Enron money and hiding its increasing debt.
WorldCom was actually a bigger bankruptcy than Enron. Synopsis[ edit ] The film begins with a profile of Kenneth Laywho founded Enron in The investment banks, the law firms, and Arthur Andersen all got their bread buttered by Enron.
Enron used this uncertainty to repeatedly deceive investors about the state of its finances.
LJM would receive hefty fees from Enron in exchange for removing the debt or adding additional earnings as needed. The faltering Fannie Mae far outshines WorldCom and Enron combined in terms of potential liabilities.
This prevailing attitude led to a business strategy and compensation structure with perverse incentives. The Board did so because it helped the stock and presumably their wallets if they were compensated in stock while Andersen received tens of millions of dollars from Enron for their consulting services on various accounting transactions or issues.
A WSJ article on this topic can be found here: Mark-to-market accounting meant employees were often rewarded based on their own rosy estimates for long-term projects even if these projects never actually made money.
Fastow also takes advantage of the greed of Wall Street investment bankspressuring them into investing in these shell entities. Clifford Baxteran intelligent but manic-depressive executive; and Lou Paithe CEO of Enron Energy Serviceswho is notorious for using shareholder money to feed his obsessive habit of visiting strip clubs.
LJM would fund the acquisition by taking out loans of its own, but the lenders would require Enron stock as collateral, which worked as long as the stock remained high. Thank God for Armando Falcon, Jr. With the vision of transforming Enron from an energy supplier to an energy trader, Skilling imposes his interpretation of Darwinian worldview on Enron by establishing a review committee that grades employees and annually fires the bottom fifteen percent, a process nicknamed within the company as " rank and yank ".
Elsewhere, Enron begins ambitious initiatives such as attempts to use broadband technology to deliver movies on demand, and "trade weather" like a commodity; both initiatives fail. The value of an asset can be accounted for on a historical cost basis what you paid for it when you bought it or the market value what it would be worth if you tried to sell it today.
In many ways, the Enron tale is a classic one. Fund managers who control money invested in the stock market use mark-to-market accounting because the price of a highly liquid asset such as a share of stock is easily attainable.Apr 21, · Enron: The Smartest Guys in the Room tells the inside story of the spectacular rise and fall of one of the most scandal-ridden corporations in American history.
Based on the best-selling book of the same name, this film takes a look at the collapse of the once seventh-largest company in the United States, where executives misappropriated billions of dollars, leaving investors scrambling and /10().
The Smartest Guys in the Room has 12, ratings and reviews. BlackOxford said: Great ExpectationsThis is the definitive case history of the demise /5. ENRON: The Smartest Guys in the Room chronicles a corporate disaster in which top executives from the seventh largest U.S.
company walked away with over one billion dollars. May 20, · A documentary about the Enron corporation, its faulty and corrupt business practices, and how they led to its fall/10(K).
The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron [Bethany McLean, Peter Elkind, Joe Nocera] on mi-centre.com *FREE* shipping on qualifying offers.
The tenth-anniversary edition of the definitive account of the Enron scandal, updated with a new chapter The Enron scandal brought down one of the most admired companies of the s/5().
The Smartest Guys in the Room, The Amazing Rise and Scandalous Fall of Enron does do what a lot of books that are then made into movies which is to fill in gaps and put more meat on the bones of the story/5(12).Download