Enron: The Smartest Guys in the Room

What's he building in there?

What the hell is

he building in there?

It had taken Enron

16 years to go

from about 10 billion

of assets to

65 billion of assets.

It took them 24 days

to go bankrupt.

What the hell is

he building in there?

This company collapsed

so quickly and so entirely.

I mean it was into bankruptcy

within a matter of weeks.

It just immediately had

all the makings of

a gigantic scandal.

He's hiding something

from the rest of us.

The fatal flaw at Enron

if there is one,

you say it was pride

but then it was arrogance,

intolerance, greed,

So many of them were

blinded by the money

that they didn't see that

they were sinking

their own life boat

We have a right to know.

It just got hungrier

and hungrier.

Sooner or later

they were doomed to go off

that cliff at 90 miles an hour.

It's astounding that they

got away with it for so long.

In reality,

Enron was a house of cards.

What we didn't know was

that the house of cards

had been built over

a pool of gasoline

It all sort of became

smoke and mirrors.

Committee will come to order.

This is a case of America's

largest corporate bankruptcy.

The question here is

what happened,

who was responsible

for it happening,

and what can we do to

prevent this sort of thing

from happening again.

I think the Enron story's

so fascinating

because people perceive

it as a story

that's about numbers.

That it's somehow about all

these complicated transactions.

But in reality

it's a story about people

and it's really

a human tragedy.

On this date, at 2:23 am,

Sugar Land police

discovered John C Baxter

located inside his vehicle

with an apparent gunshot

wound to the head.

Ah... at this time there has

been a suicide note located.

Sir, can you give us

any indication whether

this was related to

Enron's bankruptcy.

We do know that he was

and Enron employee,

but as far as any other

indications of why

he committed suicide,

no we do not.

Mr. Skilling,

let me touch on something

that's sort of sad

and that's of course

the suicide of Cliff Baxter.

And you mentioned

he was your best friend

in your opening statement.

Before he died,

did you have many

conversations with him?

Yes.

And were any of them

relative to Enron?

Yes.

There's no one that knew Cliff,

toward the end,

that didn't realize that

he was heartbroken

by what had happened.

And Cliff came over to my house

and he said 'They're calling

us child molesters. '

He says,

'That will never wash off. '

But Mr. Skilling

you don't believe that.

I don't believe what?

You don't believe that

the press and everybody

calling Cliff Baxter

or yourself or anybody

on the Board of Directors,

denigrating or tainting you,

you don't think it's accurate

is what you're saying

to us here today.

I do not believe...

I did not do anything wrong

that was not in the interest

In all the time that

I worked for Enron Corporation,

it was in the interest of the

shareholders of the company.

Ultimately, who was responsible

for the downfall of Enron?

Only a few years ago,

Enron was the nation's

seventh-largest corporation,

valued at almost

70 billion dollars.

Pundits praised the company

as a new business model.

This trading floor was manned

by America's best and brightest,

charting the futures of

energy and power.

And high above each

with a private staircase,

Ken Lay and Jeff Skilling

had built their own

plush staterooms.

They were known as

the smartest guys in the room.

Captains of a ship

too powerful to ever go down.

In the Titanic, the captain

went down with the ship.

In Enron, it looks to me like

the captain first gave himself

and some friends a bonus,

then lowered himself and the

top folks down in the lifeboat

and then hollered up and said,

by the way, everything is

going to be just fine.

Like Skilling,

Ken Lay said he hadn't

done anything wrong.

Could we have a word

with you real quickly?

We're with CNN.

Really not this morning,

thank you.

Beyond the financial issues,

some suspected

a political conspiracy.

Enron had been the largest

corporate contributor

to the first presidential

campaign of George W. Bush.

This is not a political issue,

it is a business issue.

You know Enron had

made contributions to

a lot of people

around Washington D.C.

And if they came to this

administration looking for help

they didn't find any.

To say no help had is like,

'I did not have

political relations

with that man, Mr. Lay. '

What about the fact

that George W. Bush

calls Ken Lay, Kenny Boy?

That's my nickname

for my husband,

which he overheard.

So it wasn't original,

with the President?

It certainly wasn't.

According to published reports,

your husband earned

about 300 million dollars in,

in compensation, in stocks

from Enron

over the last four years.

What happened to

all that money?

It's gone. It's gone.

There's nothing left.

This is the shredded evidence

we got that came out of Enron.

We very quickly determined that

the insiders had sold off

a billion dollars of their stock

in the preceding several months.

Did you convert stock

worth 66 million dollars?

I don't know, but...

I don't have

the records with me...

Would that be surprising to

you to learn that you did that?

No, that would

not be surprising.

Mr. Fastow

got only 30 million

in stock proceeds from Enron,

but he took another

30 million out,

with his side deals.

I think there was just

an immediate sense of outrage

at Lay and Skilling and Fastow

when people realized

how much they had profited,

and how completely artificial

the appearance of

this company had been.

News of shredding at Enron

raised more questions.

What answers were lost

in the torn documents?

20,000 employees

had lost their jobs.

$2 billion in pensions and

retirement funds had disappeared.

Was Enron the work of

a few bad men

or the dark shadow of

the American dream?

Lay comes to the story of

Enron from very humble roots.

My father was

a Baptist minister and,

and he was ordained

a Baptist minister

while I was very young

probably two, three years old.

Ken Lay was a Baptist

Preacher's son in a family

that had been poor

all it's life

and he, throughout his life,

worked several jobs as a kid

and clearly had in mind that

things could be better...

and wanted things to be better.

He had a huge ambition to

make wealth for himself.

He told a story later

about sitting on a tractor,

dreaming about

the world of business

and how different

it could be from the way

things were for him

and his family.

Lay was a PhD in economics

and he became,

very early on,

a real apostle for deregulation.

He was way ahead of

the curve on this.

He was thinking

about energy markets

that would be deregulated.

And in particular,

the natural gas industry

that was shackled by regulation.

And he pushed aggressively in

Washington to change all of that.

In Washington,

Lay became part of

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