Enron: The Smartest Guys in the Room Synopsis
Arie Marie Wilson
University of Phoenix
Enron: The Smartest Guys in the Room Synopsis
Enron was considered the seventh largest company in America valued at seventy billion dollars that went bad. Kenneth Lay was the CEO of the company who made poor business decisions which in turn impacted not only the employees but the market as well. Kenneth Lay and his counterparts were only concerned about themselves and how much money they could pocket for themselves. Kenneth Lay and Jeff Skilling were known as the smartest guys in the room. They gave themselves bonuses and lowered everyone else’s pay, insiders sold of billions of their stocks toward the end while encouraging the employees to invest their 401k into the company, and billions of retirement and pension funds suddenly disappeared. Enron made so many managements errors throughout their tenure. Enron profits were so high that many people in the industry questioned the validity of their quarterly earnings. There were so many things that other companies could learn from Enron on not what to do. To try and cover up the scandals they would take funds and place them in personal offshore accounts so that it would not be easily detected. Enron artificially drove up electricity prices, cooked up phony accounting books and manipulated earnings, falsified bank statements, and traders made bets on the market. Kenneth Lay maintained that he knew nothing about this and was shocked that trader’s gambled away money but he knew all along what was going on. Jeff Skilling came along and concocted what he thought was a brilliant idea of market to market accounting, which allowed Enron to book potential future profits on the very day the deal was signed no matter how much cash came in the door. Skilling considered this the “Survival of the Fittest”. The short term gains caused by poor management errors lead to long term destruction for the company and devastation for the...