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• Enron: The Smartest Guns in the Room
• Q & A with Mr. Gibney
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Tavis: Alex Gibney is a talented filmmaker and an Emmy-winning writer, producer, and director. In his latest project, he takes on Enron, the Houston-based energy firm that became the public face of corporate malfeasance. The documentary is called 'Enron: The Smartest Guys in the Room.' It opens this month in select cities across the country. Here now, a scene from 'Enron: The Smartest Guys in the Room.'

Senator: Did you convert stock worth $66 million?

Jeffrey Skilling: I--I don't know, but I--I don't have the--

Senator: Would that be surprising to you to learn that you did that?

Skilling: No, that would--that would not be surprising.

Rep. Ted Strickland: Mr. Fastow got only 30 million in stock proceeds from Enron, but he took another 30 million out with his side deals.

Man: 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.

Tavis: Alex, nice to meet you.

Alex Gibney: Good to meet you, Tavis.

Tavis: Glad to have you on. I'm not a filmmaker, but if I were, I think I might have a difficult time knowing exactly where to start on a piece like this because from what we read, at least, this scandal and the behavior inside of Enron was so egregious. As a filmmaker, how do you know where to start putting together a piece like this?

Gibney: So much corruption, so little time.

Tavis: Yeah, yeah.

Gibney: I think--the guideline for me was the fact that--I read this book, on which the film is based, and that book taught me that it wasn't a story about numbers. It was a story about people. So, in that context, you know, we had to look to the human story. In terms of the narrative, you know, strictly speaking, I guess it's kind of a heist film, and we followed the money. So, we followed the rise and the fall and ultimately, by focusing on the characters and the narrative, you know, we slowly found our way through this thicket of very complicated financial transactions.

Tavis: You got 2 different thoughts that are working in my head, at least at the moment. On the one hand, you agree that the numbers, that the sheer nature of the numbers involved in this scandal make it terribly egregious. On the other hand, to your point, because it is a story of people, a lot of people got crushed here. Tell me why you think the story of the people who were crushed in their own financial lives--the story, rather, of the scandal that these men perpetrated, why does that pale in comparison to the people's lives who were shattered as a result?

Gibney: Well, I mean, that's it. You know, really, we think about economics as numbers, but really economics is about human survival, and what was so terrible about this story was that a few people got a lot of money, hundreds of millions of dollars, and they were really very callous toward their own employees and also the stockholders.

Tavis: How callous?

Gibney: Well, I mean, let's look at it. You know, I think they were callous in the sense that all they were focused on was the stock price and how much money they were making. They became so arrogant and so above it all, that I think everything else just didn't matter to them in some fundamental way.

Tavis: Aside from the fact that they did things that were illegal, tell me what you learned about how they ran Enron and why that's different from what other CEOs do. Most CEOs, we think, care most importantly, most significantly, about the bottom line. They talk a good game, but at the end of the day, they understand that to be CEO Of this company for any length of time, these stock prices better stay up or certainly better go up. So, the people that ran Enron were no different than most CEOs save the fact that they did things that were illegal, unless you found out something that I don't know.

Gibney: No, but I think what's happening with Enron, though, is there was an increasingly wide gulf between the way the company was and the way they were reporting it to be, 'cause they had found a way, through a peculiar kind of accounting, to, you know, basically report profits even though they hadn't made them yet, and it was signed off on by the S.E.C. And so what would happen is a very small amount of cash was coming in the door, but they were reporting high profits, and over time that gulf became wider and wider and wider until they were really in a deep hole. So, their stock price was going up because to the outside world it seemed like they were a very successful company, a $70 billion company, number 7 in America. So it's like Microsoft, but the reality wasn't there, and I think that's what makes Enron different, in that fundamental way, but there are some things that Enron shares with other companies.

Tavis: Like?

Gibney: Well, I think the fact is that, you know, you can look at this--one of the interesting things about the film is you can look at this story and say to yourself, "Wait a minute, you know, maybe all of us are paying too much attention to our stock price and not the fundamentals of the company, or too much attention to these abstract financial issues, or executive compensation, and not enough attention to the employees." you know, these are lessons that I think will transcend the dissolution of Enron.

Tavis: They are lessons that--let me twist your phrase a bit--they're lessons that perhaps can transcend Enron. I guess the question in that is whether or not you think that those lessons will transcend Enron. Is corporate America going to get it? And I wanna follow up with a question about government. But first, corporate America.

Gibney: I don't know. I mean, I think there's--you know, we're not in a bull market anymore, so there's some retrenchment, and there are some people--you know, I talked to a lot of business executives who seemed deeply concerned about what happened at Enron and feel like, in their gut, they wouldn't have allowed that to happen, and I think some of them wouldn't. But I think the tricky thing, and I don't know if the lesson has really been learned, it can't be about the rules, 'cause ultimately Enron was great at gaming the rules. You know, whatever rule there was, they'd find a loophole for it. The end of the day, it really has to be about morality and ethics and whether or not people believe there's a place for that in the economy. And so, to the extent that executives believe that, and some do, then I think there will be progress.

Tavis: By and large, though, to your point, do you think there is a dearth and a paucity of that in corporate America on the part of executives?

Gibney: I think there is, because I think as a society we've allowed ourselves to believe that somehow, when it comes to the bottom line, when it comes to the economy, you know, even though we talk about free markets, somehow we're prisoner to the market. We have to do what the market tells us instead of trying to figure out how to do that, but also do it ethically. So I think, you know, executives have kind of given themselves a free ride in saying, "Look, I gotta make money for my stockholders. That's my only goal. Everything else is secondary." Well, you know, once you take that view to its extreme, then you start to have problems.

Tavis: I wanna ask you a question here that will allow us to go behind the headlines. If one were to believe, what they read in the headlines over the last year, one would think that government is getting tough on corporate malfeasance. When you look at the stories and the pictures of the Adelphia executives being brought out in handcuffs; and just recently Bernard Ebbers, former chief of WorldCom, found guilty; Martha Stewart, of course, served her time; Mr. Lay, his trial coming up. One could look at the news media around these corporate executives who are in trouble and think that government is finally paying attention, that the little guy isn't the only guy that's gonna be taken to task anymore and made to behave, but is that really happening in the seat of power in Washington?

Gibney: I think it is and it isn't. I mean, I think you're right to point out that there are a lot of prosecutions now, and some executives are gonna do some serious time as a result of some of the things that they did, and there are certainly a lot of people who've already been convicted in the Enron case. As you say, Lay and Skilling are gonna go to trial, I think, in January of next year. The bigger question, though, is not so much in the enforcement side--and the enforcement side is interesting. Eliot Spitzer is doing a very interesting job. Now he's going after the insurance companies. But I think that the question is whether or not there's a sufficient balance in our country between the regulatory side and the business side, because it's--you know, if there isn't a balance, then you have a world that's basically law of the jungle and if it's law of the jungle, then it won't surprise people to learn that a few lions and tigers pop up and start to eat some people. So, that's the question about government that I have, is whether or not there's a sufficient balance between the regulatory agencies and the business community.

Tavis: Talk to me, speaking of government--government is really the people, we the people. Talk to me about the people whose lives were shattered as a result of this scandal, what we're gonna learn in this film.

Gibney: Well, I mean, in particular--we focus a lot on the executive suite, 'cause we wanted to really look at how something like this happens from the inside out up top, but we do look carefully at one particular employee, a guy who was a lineman at Portland General, which is a state-owned utility for many years that was bought by Enron. And he converted all his stock to Enron stock, and he had a--you know, a retirement account to pay for his kids' education, pay for his own retirement, and it briefly rose very high, and then he lost it all. And he lost it all and--and perhaps one of the most painful things was--there was a period of time when employees were frozen out of their 401(k)s. They couldn't sell, and yet the executives during that period were able to. So, it's really--you know, it's a horrifying look at what can happen when the high and mighty take it all for themselves, and the little guy really does get screwed. And, you know, it's devastating because he had a retirement account of, I think, like, $300,000. At the end, he was left with 1,200 bucks.

Tavis: Sometimes I wonder--and I'll offer this as a quick exit question here--I wonder sometimes whether or not executives play ignorant to things that are really happening on the one hand. On the other hand, these companies are so vast--this appears not to be the case at Enron; with Mr. Ebbers, it appeared not to be the case; Martha Stewart, it appeared not to be the case--that they did in fact--they did in fact know more about what was happening than--at least the juries have found in some of these cases they knew more. But I wonder whether or not sometimes these executives really don't know all of the malfeasance that's going on in the corporations because these things are so massive. We see Warren Buffett now having to be called before some investigators to testify about what he really knew and if he really knew it. I wonder what your assessment is of how often these executives really do know the drama, the illegal activity, that's taking place in their companies.

Gibney: Well, look, I mean, these are huge companies, so you can't be expected to know everything, but at the same time, you know, a lot of executives in this country are paid enormous amounts of money, and they get paid enormous amounts of money because they're visionaries, because they're supposed to know a lot. And yet somehow, when it comes time to look at corporate malfeasance inside their company, they don't know anything. It's like they're geniuses when they're getting their stock options, but when it comes to criminal activity, they're dumb as doorknobs. How does that work? I don't think it's--you know, it doesn't seem right.

Tavis: Fair enough. Nice to have you on.

Gibney: Thank you, Tavis.

Tavis: 'Enron: The Smartest Guys in the Room,' check it out. We'll be right back. Stay with us.