Smarter than the Smartest Guys in the Room -- Interview with the director of the Enron documentary

I was lucky enough to get a chance to interview writer/director Alex Gibney about his superb new documentary called “Enron: The Smartest People in the Room,” based on the book by Fortune writers Bethany McLean and Peter Elkind.

You made a movie about Henry Kissinger and a movie about the blues, and now this movie about Enron. What do you look for in a project?

It can’t just be a subject. The theme has to have a dramatic component or it’s only an illustrated lecture. What I look for is not just a story, but characters. You can’t give people the level of detail in a movie that you can in a book, so the movie has to be an agent provocateur for the book, to get the audience to understand the basis of the story. And that is that together, the characters made Enron not a public trust but a reflection of their egos. That was interesting in dramatic terms, a classical Greek hubris tragedy. They were so concerned with their own performance that they could not see anything else.

Let’s talk about some of those characters. Give me your thoughts on some of the people, starting with Cliff Baxter, whose suicide opens the story.

He was a guy who was one of the “men with spikes” they used to talk about at Enron. He was an undiagnosed manic-depressive. He could do the huge deals, but he sunk into deep lows. He was somewhat unstable but at the right time dynamic and his ability to convince people was key. Some might call it marketing, but others would say flim-flam. He could persuade people that this is the place you want to be and this is the deal you want to make. But he so internalized everything that he took everything personally to an extraordinary degree.

Ken Lay was the politician.

Jeff Skilling connected with the business people and muscled the analysts. He literally said, “I am Enron.” He had to hold two opposing views and you can see him crack. He was an intellectual macho man, an intellectual bully, who externalized his transformation. He physically transformed himself to match the vision of what he wanted to project. It wasn’t about the money; it was about the cred. He wanted to be another Jack Welch. But his great weakness was that he found the details boring. Execution was beneath his notice. The idea was what mattered, partially because one person can take credit for an idea. He was more of a consultant than an operator.

Andrew Fastow was rules-oriented. Rules were a road map to the possible, and there was always a way around them. He was a morally weak individual put in place to do stuff that Skilling needed done but didn’t want to know about.

Sherron Watkins was the one to notice something was wrong because she came into Andrew Fastow’s department late, so she never got acclimatized to what was going on. You have to remember that when she walked into her lawyer’s office and told him that Enron was a fraud, it was as unbelievable as if she had said that Microsoft didn’t really have the assets and revenues it was reporting. In that environment, at that time, it took a lot of guts to do what she did. Lay went to Vison & Elkins to try to fire her.

The California traders – on the job they were rapacious killers, but off the job they were very decent, and that’s part of the larger cultural lesson of the film. We’ve given people permission to be killers.

One of the most striking parts of the movie is the Valhalla story, an early fraud that seems to be an indicator of what lies ahead.

Yes, that story shows that from an ethical perspective what mattered was making money, and the ends always justified the means. It was the beginning of an incremental pattern of “cheat a little and then cheat a little bit more to make up for the original cheating.” But this was not a case of a few bad apples. It was a case of letting people know what the values were, like, for example, giving bonuses to the people who committed fraud at Valhalla. Then people work to those values. Skilling really did have a vision. He did not intend it to be a scam. A lot of his innovations have remained. But he did not have the patience for execution. He thought it was beneath his notice.

There were a lot of complicated and arcane details in the story. How do you make that accessible?

We had to boil the story down to its essentials and look at it almost like a heist film. The only thing we went into great detail on was explaining “mark to market” accounting, and our explanation was so clear the prosecutors said they might use it to show the jury what it meant. We used visuals, like the stock footage of gambling and the sky-diver to show risk. One thing I didn’t realize until after we used the image of the sky-diver was the way it played into the idea of Icarus, flying too close to the sun and dropping out of the sky.

I wanted to show how they convinced everyone they were a respectable company, giving out an award to Alan Greenspan and hanging out with Henry Kissinger. It gives you a peek inside the world of the people who decide things like whether Social Security will be privatized. It’s like the Titanic. A few people sail away in lifeboats and everyone else drowns.