About a week ago, I wanted to watch something (out of the corner of my eye, as I often do during my trading day) that wasn’t Bob Ross or one of the movies I’ve seen a thousand times already. I fired up Netflix and I decided to watch The Smartest Guys in the Room, the Enron story.
I love documentaries, and I love learning about business scandals, but even though I already knew the Enron tale fairly well, watching this movie made me really mad.
As long-time readers know I’m a big fan of capitalism, and I’m absolutely all for entrepreneurs and innovators getting stinking rich. That’s just fine and dandy. Enjoy your jet, your mansion, and your yacht. Nothing wrong with any of that, so long as it is procured honestly.
But when crooked accountancy or other nefarious means are the road to fortune, well, screw you. Society needs to confiscate everything you have and throw you into the slammer. And that is precisely what happened to Enron’s senior management, and it’s a sad tale.
I distinctly remember back in 2000 when Enron was the talk of the town. It was on the cover of magazines every week, and – believe it or not – they actually flew out to Palo Alto to buy Prophet!
I was soon thereafter, along with a couple of other Propheteers, brought to their Houston headquarters to explain the company. I was dazzled by the glitz and glamour of it all. But, Thank God, the deal never went anywhere. If it had, I would have wound up with absolutely nothing.
While watching the movie, I was reminded of the back-slappin’, Texas-drawlin’, frat-boy good-old-boys that were running the place. By the year 2000, the hubris was something of Greek tragic proportions, including the time when Skilling famously addressed a Wall Street analyst as an “asshole” during a conference call, simply because he had a non-softball question.
The analyst – perhaps one of the few in human history who actually did their job properly – was prescient, to say the least:
Their accounting firm, Arthur Andersen, went down with the ship. The founder of the place, who started it in 1913, would have wept bitter tears………
Andersen, who headed the firm until his death in 1947, was a zealous supporter of high standards in the accounting industry. A stickler for honesty, he argued that accountants’ responsibility was to investors, not their clients’ management.
During the early years, it is reputed that Andersen was approached by an executive from a local rail utility to sign off on accounts containing flawed accounting, or else face the loss of a major client.
Andersen refused in no uncertain terms, replying that there was “not enough money in the city of Chicago” to make him do it. For many years, Andersen’s motto was “Think straight, talk straight.“
The shame of the accounting firm was that the sin involved was shredding of documents by a handful of the folks in the Houston office, but since this fiasco nuked the entire firm, the worldwide workforce of 84,000 people suddenly had no jobs. Incredible.
One of the funny ironies of the entire episode is that the ONE guy who made a huge fortune and got away with it scot-free………..and this is in Texas, mind you…………was a bespectacled Chinese dude named Lou Pai who was obsessed with going to strip clubs (and bringing aforementioned strippers up to his office to check out his digs).
Anyway, he got away with something like a quarter billion bucks and became the second-largest landowner in the state of Colorado.
Of course, the very notion of a vigorous government assault on white collar crime seems absolutely quaint today. The sins being committed by the likes of Goldman Sachs go completely unmentioned (lest those who mention them be labeled as, for one thing, anti-Semitic, as Matt Taibbi was), so they are left alone to do whatever the hell they want.
You need look no farther than this very week to see Goldman doing things that, by rights, should have people in handcuffs………….but nope, not anymore.
I hope I live to see the day when all the present-day darlings that have sold their souls for money are finally exposed for what they are. The men behind Enron were, and in those days people wondered why it took society so long to wake up.
These days, it would be breathtaking if the government even put one-tenth the same effort into prosecutions. Anyway, it will be better for us all if a little justice were served once again.
In the meantime, if you have Netflix, watch the movie. It’ll make your blood boil.