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“The Smartest Guys in the Room” Documentary


The smartest guys in the room is a 2005 chef-d’oeuvre film covering the Enron scandal before its collapse in 2001. On the surface, Enron Inc. appeared as one of the best performing and promising companies in the United States. Within a short period, the firm ranked amongst top ten corporations in the United States. People invested in the company only to realize that the management team had colluded with the auditors to present wrong financial information. The documentary unravels the mysteries surrounding the Enron scandal by chronicling all the happenings that led to the collapse of the firm in 2001.

Important individuals at Enron and Arthur Andersen CPA

The key individuals at Enron included the founder Kenneth Lay. Kenneth founded the company in 1985 in the pursuit of the American Dream. The second most important individual was Louis Borget, the Chief Executive Officer (CEO). Jeffrey Skilling replaced Borget as the CEO after two years of service. Jeffrey hired lieutenants including Clifford Baxter and Lou Pai. The most important player in Arthur Andersen CPA was Arthur Andersen and his lawyer, Nancy Temple.

Their job and responsibilities

Kenneth Lay was the chairperson and the CEO of the company. Therefore, his duties included taking care of day-to-day decisions concerning the management of the organization. In addition, he was in charge of managing and implementing the firm’s vision, mission, and goals. Louis Borget and Jeffery Skilling were also CEOs at one point, and thus they shared Lay’s duties and responsibilities. Clifford Baxter’s job description was abstract, as he was only known as an ‘executive’. However, he was heavily involved in making decisions for the company under the authority of Skilling. Lou Pai was the highly influential CEO for the company’s energy services. Later in 2001, he ran the Xcelerator and venture capital departments. Finally, Arthur Andersen was the firm’s auditor. His responsibilities included ensuring that the company’s financial statements were in order.

Enron’s major business at the beginning

At the start, the company’s core business was energy and other related products. The company started after the Omaha-based InterNorth Company merged with Houston Natural Gas. The company focused on the transmission and distribution of natural gas and electricity in different states across the US. By 1998, the firm had ventured into the water sector where it offered different water-related services. Unfortunately, this venture failed, thus leading to huge losses for the company. Later on, the company ventured into the plastic, pulp and paper, and steel industries. The performance of these divisions appeared to be thriving, but the results were inflated.

Major business at the final stages

In its final stages, Enron dealt with over thirty business entities. Its products included online marketplace services like ePowerOnline, broadband services like customizable bandwidth solutions, energy, and commodities like natural gas, coal, plastics, and petroleum hedging. In addition, the company was involved in commercial and industrial management services like capital management and project development and management services like the Florida gas transmission and engineering, procurement, and construction services.

How Enron kept liabilities and the drafters

Enron kept the liabilities of its balance sheet by using off-balance sheet entities. In this case, the company would transfer its losses to other corporations, and thus the losses would go unreported. Consequently, the losses would not appear on the balance sheet, and thus investors were be duped into thinking that the company was making profits. In addition, the company would invest in a project and extrapolate its future profitability. However, the involved parties would report these predictions as if they had already occurred. Therefore, the company appeared to be making profits, while in essence the gains were based on mere speculations. The key drafter of this plan was Jeffery Skilling under his mark-to-market accounting principles.

The perpetrators’ masterminds

The key players that helped Enron to perpetrate its plan were as follows. Andrew Fastow, the company’s finance chief officer. As the top finance officer, he covered all the financial ills at the company. Ben Glisan Jr. worked in the company’s accounting department and he allegedly perpetuated financing schemes. Mark Koening was in charge of the infamous conference call, but he did not blow the whistle even though he was aware of the fraud. Luo Lung Pai was the manager of several divisions in the company. Apparently, he supported the fraud and used the money to fund his luxurious lifestyle. Greg Whalley was at one point the president of the company and he was heavily involved in the mark-to-market accounting. Finally, Nancy Temple, a lawyer from Arthur Andersen, uncovered the fraud, but she did not raise the alarm. In addition, Kenneth Lay and Jeffery Skilling were at the forefront to cover and propagate the fraud.

Enron’s manipulation of electricity in California

Given its reputation, I think Enron manipulated the price and availability of electricity in California. By the time the energy crisis heightened in the year 2000, Enron was at its deathbed. The company had exhausted all its manipulations, and thus it needed more money in a bid to buy time. Therefore, Enron caused ‘congestion’ into the grid in a bid to get payments to decongest the system. In addition, Enron was involved in the power ricocheting scheme in California by diverting energy to states that do not have price caps. All these schemes aimed at creating illegal money for the company, because at this point its business model was not sustainable.

Arthur Andersen’s involvement in Enron

Arthur Andersen’s involvement in Enron hinges on the fact that he was the company’s chief auditor. Therefore, as the auditor, he was supposed to report any form of malpractice in the company’s financial statements. However, he covered all the information on the fraud and in a bid to cover his involvement in the scandal, he shredded all the documents that were necessary for the SEC committee to establish the truth behind the Enron’s financial statements. In return, Andersen earned handsomely from the fraud by pocketing over $50 million in audit and consulting fees.

Government indictment

The government should have indicted Arthur Andersen CPA and tried it for obstruction of an investigation. The audit firm was involved directly in destroying crucial documents that would help the SEC in its investigations. Apart from shredding the hard copy documents that would contribute to the unearthing of the scandal, the firm deleted all the soft copy evidence contained in thousands of emails. This act amounted to interfering with evidence and sabotaging the investigations.


The Enron scandal was well orchestrated, but its perpetrators were myopic in thinking that their schemes would not be discovered. The key players in the scandal were Kenneth Lay and his inside accomplices. Arthur Andersen covered all financial misstatements and lied to the board of directors and other stakeholders concerning the company’s financial status.

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"“The Smartest Guys in the Room” Documentary." ApeGrade, 10 Apr. 2022, apegrade.com/the-smartest-guys-in-the-room-documentary/.

1. ApeGrade. "“The Smartest Guys in the Room” Documentary." April 10, 2022. https://apegrade.com/the-smartest-guys-in-the-room-documentary/.


ApeGrade. "“The Smartest Guys in the Room” Documentary." April 10, 2022. https://apegrade.com/the-smartest-guys-in-the-room-documentary/.


ApeGrade. 2022. "“The Smartest Guys in the Room” Documentary." April 10, 2022. https://apegrade.com/the-smartest-guys-in-the-room-documentary/.


ApeGrade. (2022) '“The Smartest Guys in the Room” Documentary'. 10 April.

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