When God was away on business

OneWorld UK

By Daniel Nelson

The gravelly voice of Tom Waites singing Gods Away on Business plays out Enron: The Smartest Guys in the Room, but God was not the only absentee: bankers, auditors, accountants, stockbrokers, politicians, journalists also fell in with Americas greatest corporate con trick.

All allowed themselves to be swept along with Enrons meteoric rise in 15 years it became the countrys seventh largest corporation - but none implemented the Enron slogan: Ask why. Had they asked, they would have found the answer staring them in the mirror: greed.

Greed drove Enron, reinforced by a macho, can-do posturing. Greed justified everything, including illegality and immorality. Greed swamped the checks and balances: No-one who was supposed to say No, said No, observes a commentator quoted in the film.

The sums involved were huge. One executive left the company with $250 million.

But the money in the trough wasnt hard-earned profits. Executives were paid millions for profits from a power project in India (the countrys biggest foreign investment project) in India. The profits never materialised: the scheme lost $1 billion.

This was possible because of a book-keeping device: as soon as a deal was signed, Enron put the potential profits on its books. Thats why its balance sheet always looked so healthy, with profits rising every quarter. The value of the companys stock rose in line with its losses.

Thats why, too, when Bethany McLean wrote an article in Fortune Magazine in March 2001 titled, "Is Enron Overpriced?", the house of cards tumbled so quickly. It was a classic case of the Emperors clothes: she simply asked, How does Enron makes its money?

This is a clearly told and entertaining documentary. Its a human rather than a business story, and the final section on the way the companys money traders destroyed Californias electricity system (a reliable and efficient system built up over 100 years was turned into a casino) is a tour de force. Its incredible to see traders shutting down power plants in order to force up the price of electricity, and a salutary reminder, given that powerful voices are still praising the benefits of deregulation all over the world.

And as Bethany McLean has warned, I don't think Enron is an isolated incident of people in a dark corner doing bad things ... It was all a game to meet Wall Street expectations and keep their stock prices up. So many companies engaged in that behavior. With so many companies, their financial picture paints some mixture of reality and illusion. In Enron's case, it was more illusion than reality. In other companies, I hope it's more reality, but you have some illusion all of the time. There was this attitude that you do anything you can to meet Wall Street expectations, get your millions and get out. That short-term view of what business is is incredibly dangerous, and I hope Enron does stay front-in-mind for people.