In the 10 years since the infamous Enron Corporation collapsed, there have been more than 25 recorded cases of corporate accounting scandals in the U.S. We now live in an age of protest, where “corporate greed” is high (perhaps highest) on the list of grievances for many Americans. Considering the contentious environment to which we’ve become so accustomed, I decided to revisit Enron: The Smartest Guys in the Room to reminisce on the scandal to end all scandals (Well… of 2001 anyway, as Madoff would argue) so I could ask myself: What have we really learned from this?
Fortune Magazine reporters Peter Elkind and Bethany McLean wrote The Smartest Guys in the Room (released in 2003) during the fallout of Enron’s collapse. McLean wrote a seemingly innocuous March 2001 article titled “Is Enron Overpriced?” which would become one of many catalysts that brought down former CEOs Jeffrey Skilling and Ken Lay—who devastated thousands of employees and destroyed pensions and retirement plans along with them.
The two were at the forefront of Enron’s crooked accounting practices that allowed false earnings reports to be released to the public. Based on their belief that this was an extremely profitable company, investors poured money into the corporation, thinking they had struck gold. But in reality, the gold did not exist.
Besides the many corporate controversies in the years since Enron, we have watched our housing market collapse, as well as our banks. And all of these scandals involved one common denominator: Greed, and lots of it. Even as the SEC continues to develop more stringent rules, there will undoubtedly be those individuals out there who will make it their life’s mission to outsmart the regulators with new, innovative ways to cheat.
We haven’t, and probably never will, learn how to completely outsmart those individuals. But if anything, since 2001, we’ve been reminded of Enron’s age-old lesson. Whether it be a profitable company with no proven success, or a home loan that requires no down payment or credit check: If it seems too good to be true… It probably is.
Despite the fact that Enron: The Smartest Guys in the Room is now several years old, I think anyone who hasn’t watched it, should. Even though Enron as a company no longer exists, there are certain lessons and anecdotes in the film that everyone should see. The epitome of greed, the courage to stand against it, and the cheesy-yet-true revelation that you can never judge a book, or a major corporation, by its cover.