When the Enron scandal first broke at the end of 2001, few people could have realized its full extent. Bethany McLean, the Fortune Magazine writer who first broke the story questioning how Enron made its money, was probably less surprised than most. McLean and coauthor Peter Elkind later wrote a book further investigating Enron’s rise and fall, called Enron: Smartest Guys in the Room. Documentary filmmaker Alex Gribney first heard about the book when his sister-in-law gave him a copy; after reading the book, he knew he wanted to make a film about the story. The resulting documentary, also titled Enron: Smartest Guys in the Room, is now on the Oscar shortlist for Best Documentary. Cinematical recently caught up with Gribney for a phone interview about his film.

Cinematical: What drew you to the idea of making a film about the Enron scandal?

Alex: I did break rule 1-A of the filmmaking guide which is: never make a film about accounting. I’d seen the Enron story from afar and was generally outraged. But it didn’t occur to me to make a film about it until my sister-in-law gave me the book. The portions with some of the key characters were just extraordinary. These people were larger than life in a way that was hard to imagine. The authors of the book wore their outrage on their sleeves. They drew very intricate portraits of the key characters in a way that made them epic characters.

Cinematical: Do you think the key players, Ken Lay and Jeff Skilling, knew more than they let on?

Alex: I think Jeff Skilling was smart enough that he knew, late at night, that the future of Enron did not look bright, but he had to make it look like all was right. He began to crack up a little bit. There’s a shot of him later in the film when he responds to a question from Barbara Boxer and he seems a little unhinged. The other thing about Skilling and Lay – there are a lot of differences between them, but the thing is as they’re about to go to trial, they seem themselves as victims. They watched $70 billion evaporate, people’s life savings evaporate, and they see themselves as the victims. At the end after he was indicted, Ken Lay says to the crowd, “Linda and I are down to our last 20 million”.

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Cinematical:  Do you think he was being ironic?

Alex: No, not at all. It was a staggering display of arrogance. Ken Lay says he knows nothing. It’s amazing how much credit these guys were willing to take for Enron when its stock was going up, and all the business magazines wanted to do stories about Enron, and it was the company of the future. It’s also amazing how little responsibility they were willing to take when the roller coaster ride started to go down.

Cinematical: How closely did you work with Bethany McLean and Peter Elkind?

Alex: We went through an initial period of learning to trust each other. We trust each other now, of course, but at first they weren’t sure who I was or what I was going to do. They were pretty generous about helping connect me with the sources they had used in writing the book. Then I had to go off and kind of find the story on my own. I had written a treatment based on the book, but I knew I had to tear the treatment up and look at it from a filmmaking viewpoint. And I had access to some things they didn’t, like the audio tapes.

Cinematical: Let’s talk about those audio tapes. How did you get your hands on them?

Alex: From the Snohomish County Public Utility District in Washington. Snohomish was great, they were like David and Goliath – Enron was suing them for non-payment of their electric bill after screwing them over. The FBI had all these tapes. They’re routinely recorded for commercial purposes, to check stuff later if you need to, like if someone says you quoted this price, and you say you quoted that price. The thing is when the tape is running all the time, there’s a tendency to forget the tape is on.

Snohomish hired a group of kids to listen to hundreds of hours of tape. They got permission from the FBI to make them public, which I think the FBI probably regrets now. We just mined them a little bit more thoroughly than some of the others did. In our office we had about 50 hours that we listened to. The stuff that was inside that we pulled for the film, some of it was pretty deeply buried.

Cinematical: What went through your mind when you heard some of those bits you pulled for the film?

Alex: It was like hearing the voice of evil. They were laughing, having such a good time about burning California. It’s true that traders have a certain kind of macho banter at work. You have to convince the person who’s your counterpart that you’re a mean motherfucker and you don’t suffer fools gladly. But you don’t often hear traders laughing about the suffering they’re causing, enjoying it like that. So we investigated it, and we found that a lot of these guys, outside the job they were nice guys, gave to the community, and on the job they were killers.

It made me wonder if it was part of a larger societal thing. The west coast traders in particular – they believed it was their job as traders to attack any weakness they saw –by brutally attacking and destroying California, even if it meant ordinary citizens would pay double or quadruple. On a more fundamental level – they were profiting because of the pain and suffering of other people. That’s a kind of moral blindness that’s hard to fathom. But I think these ideological blinders allowed them not to see their moral weakness.

Cinematical: So you see it as reflective of society?

Alex: I think Enron is the exaggeration that proved the rule. We had come to believe as a society that  - as President Reagan said in that speech that’s in the film - government was not the solution, it was the problem, and that reckless pursuit of private interest and gain would lead to the best possible outcome. Adam Smith’s invisible hand, Gordon Gekko. Greed is good. And I think that made people believe they could be as mean spirited as they needed to be because that’s what had to happen to make the world a better place. But it ended up being an abdication of responsibility. It was all about self-satisfaction and greed. The golden rule must have been laughed at in Enron. It was dog eat dog. At the end of the day the inmates took over the asylum, the ruthless traders were the only ones making the money.

Cinematical: So there wasn’t anyone at the moral helm of the company at all at end?

Alex: Not at all – they had created a company where there was no morality at all. Nobody cared about building the company - that was the flaw in Skilling’s plan. I think they had a long-term view that Enron would be there buying and trading electricity, space and storage, broadband, in this deregulated world. But there wasn’t any moral leadership, and there certainly wasn’t a lot of corporate leadership either. They just hired a lot of smart people and set them loose to do what they wanted to do. In that entrepreneurial way, it kind of made sense.  

Cinematical: But you still have to have someone guiding an overall plan.

Alex: Right. You still have to have moral leadership, someone guiding the troops. I don’t think Skilling and Lay had much of a sense of responsibility to the men and women working under them. There was a famous incident where a big line of people was waiting to get into the parking lot – Skilling cut in line, someone honked at him. Skilling leaned out of his car and gave someone the finger. What kind of juvenile adolescent stuff is that? But that’s the kind of attitude reflected by the traders on those tapes when they’re talking about shoving electricity up Grandma Millie’s ass.

Like with the retreats – It was like revenge of the nerds – they’re so rich and powerful now, they can do these macho man retreats, motorcycle trips to Baja. Skilling said he wanted to take trips so dangerous that someone could die. Then here you have this lineman in Portland who’s always had this stable utility company stock, then suddenly one day it’s stamped Enron, and here you have this guy running this company who’s courting death on a motorcycle. Not the most stable guy to be trusting with your future.

Cinematical: Was Andy Fastow really at the helm of it all, or was he the fall guy?

Alex: I think he was the fall guy. Sherron Watkins described him as William Hurt in Body Heat and that’s a perfect description of him. Skilling sensed his amoral character and his unbridled ambition. You set someone like Andy up, so they work for you by being their own worst enemy. Skilling and Lay were very careful in allowing Andy Fastow to create these two huge companies that were doing business with Enron. Ken Lay says that Fastow just went off on his own and did these horrible things  - they knew he was dirty, they knew he was doing something but they didn’t want to know exactly what he was doing. I believe that they didn’t know everything that he was doing, but they knew basically what he was doing. Kind of like Bush saying “we do not torture”.

Cinematical: Can you talk about the complicity of the banks in what happened?

Alex: That was one of the most shocking parts . It’s not enough to say they knew about it – they helped plan the fraudulent bookkeeping. Sometimes they did it for equity in Fastow’s partnerships. The Nigerian barge scandal is what we used in the film because it’s a bizarre but very concrete example where it was supposed to be a real transaction: the money comes in the door, it looks like a barge was sold, but Enron has actually made a promise to Merril Lynch that Enron would buy it back from them the next quarter at a profit. They were complicit in raping Enron. The emails said – they knew what Enron was doing, they knew it was dirty, but they were making too much money to stop.

It should teach us a lesson – those esteemed financial institutions are made up of people. They’re corruptible. That’s why I put in the Milgram experiment – because I didn’t want anyone to think these were just a few bad apples. The banks are the most respectable players in the financial institution and they were blatantly aiding and abetting Enron in committing fraud. Many of the banks have settled – paid rather enormous amounts of money to a group of shareholders who are suing them. I’m not sure if they’ve paid more than they got from Enron. They’ve paid some fines. Two of three bankers from Merrill went to jail for the Nigerian barge scandal. Merrill Lynch and John Olsen, who wouldn’t give Enron a buy rating – they fired him! He’s supposed to be honest, an analyst, and Fastow calls up and they fire him. Don’t ever let morality get in the way of some cash.

Cinematical: What do you think the biggest lesson is in the Enron scandal?

Alex: Ask Why. It’s the Enron slogan. It meant one thing to Enron – it was supposed to mean,  question conventional wisdom. It was also a clue to people to look deeper. I hope everyone thinks we should all ask why – we should all ask fundamental questions of people in power. Ask why. In the Milgram experiment 65% of the people electrocuted someone to death - they thought that’s what they were doing, anyhow - and they didn’t ask why. Ask why. It’s the one question that animates a democracy.