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Letter to the editor

'Enron' is a tale that resonates

By ROBERT TRIGAUX
Published May 11, 2005

A new documentary film opens Friday in Tampa about the rise and fall of Enron, America's greatest modern corporate disaster and an ongoing thorn in Florida's economy.

The movie captures many telling scenes of business corruption and personal greed. But I already have a favorite.

Jeff Skilling, Enron's CEO and a mastermind of deception, appears at a podium so full of himself that he cannot resist a boastful joke even though he knows his remarks are being videotaped. It is around late 2000 or so and he is talking about California.

That's the same state brought to its knees by waves of power blackouts that critics claim were caused by Enron (and some other energy companies) manipulating the supply and price of electricity in the western United States to maximize company profits.

"What the difference between the state of California and the Titanic?" a smug Skilling asks his audience.

"When the Titanic went down, at least the lights were on."

Later, when Skilling suddenly resigns in 2001 but denies knowing the end is near, just months before Enron declared bankruptcy, the film offers up a telling response from Sherron Watkins. She is the Enron whistleblower who wrote a now-famous memo to chairman Ken Lay in the summer of 2001 warning of Enron's hidden accounting scandals.

Skilling's leaving, Watkins says in the film, "was like Jim Jones feeding us the Kool-Aid and not drinking it himself."

No wonder Enron so quickly emerged as a global icon of a U.S. corporate culture without a moral compass.

Enron Corp. was the Houston energy company that became the exaggerated darling of the "new economy" of the late 1990s. It went bust in late 2001.

The failure was fast, enormous and devastating to a country in a year marred by the 9/11 terrorist attacks and the start of a recession.

The year also marked the arrival in the White House of President Bush, a former Texas energy man whose biggest political contributor at the time happened to be Lay.

The president affectionately called Lay "Kenny Boy" before Enron collapsed. Now Bush does not call him at all.

Enron: The Smartest Guys in the Room, based on the 2003 book of the same title by Fortune magazine writers Bethany McLean and Peter Elkind, opens Friday at the Tampa Theatre. It runs daily (except for May 19 and 25) until May 26.

It's worth a good look for several reasons. First, Enron's well-documented demise is a timeless tale of a powerful, runaway company left without internal (where were the real managers, accountants and lawyers?) or external (where were the state and federal regulators?) controls. To the bitter end, its top executives denied anything was wrong even as they cashed in more than $100-million in stock. Enron is a story of failure on a grand scale.

Second, the film provides a reasonably lucid and often entertaining explanation of Enron's complex demise. Plenty of books have been written to try to explain Enron, but most suffer from a lack of perspective or read like a dense Shakespeare play penned by accountants.

And while Enron appears to be a story of Texas-styled corporate mayhem, the effects and lessons of the energy company's spectacular bankruptcy run deep right here in Florida.

To a large part, it was Enron's aggressive push in the 1990s for deregulation of the tightly controlled electricity business that generated so much fear of the coming competition in St. Petersburg's Florida Progress Corp., the parent of Florida Power. Convinced deregulation was inevitable, Florida Progress cut jobs right and left to become leaner. Worried it could not survive on its own, Florida Progress put itself up for sale, agreeing in 1999 to be sold to what is now Progress Energy of Raleigh, N.C.

That's just one piece of the extensive Florida effect from Enron:

In Tampa, TECO Energy (parent of Tampa Electric) was also seduced into embracing the coming deregulation. In what would be a marriage from hell, TECO teamed up with an Enron subsidiary to build power plants in distant Arizona and Arkansas. TECO advanced $300-million in the deal, money that would largely disappear when Enron went bankrupt.

By 2002, TECO CEO Bob Fagan was warning that weak economic conditions and the Enron scandal had created the "perfect storm of impact on the energy industry."

After heavy losses and a huge cut in 2003 of TECO's coveted dividend, Fagan would lose his CEO job. Today, years later, a diminished TECO is slowly regaining its balance.

Alliance Capital Management, a New York money manager, lost more than $281-million for the Florida state pension fund by investing state money in Enron stock in the latter half of 2001, just as the energy giant fell apart. Last month in a Tallahassee courtroom, a jury absolved Alliance Capital on charges of negligence, fraud and breach of contract.

Enron tried to push into Florida to sell electricity, among other things, to consumers and businesses. The company also formed joint ventures to expand natural gas pipelines into Central Florida.

In 1999, an Enron business called Azurix met with Florida Gov. Jeb Bush to discuss the idea of selling Everglades water in exchange for funding a restoration project.

Lay, a Missouri farm boy, grew up to become a Ph.D. economist who became a deputy undersecretary for energy in the Interior Department in the Nixon administration.

He moved to Central Florida as a vice president for Florida Gas Co. Seven years later, he would move again to Texas and work for a company that would evolve into Enron.

In Enron, the cast of villains extends well beyond Lay and Skilling. Chief financial officer Andy Fastow gets to reprise his role as a CFO deep in off-the-books deals to enrich himself by $45-million.

The film also does a fine job of capturing some remarkable exchanges of Enron energy traders rejoicing over the profits they are reaping from gouging California on electricity rates. The conversations were on audio tapes routinely recorded by Enron that emerged later in the federal investigation.

For Enron's 20,000 former employees, they lost their jobs, their medical insurance and a combined $1.2-billion in retirement funds in Enron stock. Enron retirees lost $2-billion in pension funds.

The Enron saga is far from over. Lay and Skilling face indictments but have yet to go trial. Skilling paid his defense lawyers an astonishing retainer of $23-million. And Enron's wake still ripples through the business community.

Go see the movie. I'm already waiting for the sequel.

Robert Trigaux can be reached at trigaux@sptimes.com or 727 893-8405.

The documentary film Enron: The Smartest Guys in the Room opens Friday at Tampa Theatre, 711 Franklin St., Tampa, 813 274-8981 (www.tampatheatre.org) It runs daily (except for May 19 and 25) until May 26.

[Last modified May 11, 2005, 00:45:11]