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Clips from Enron: The Smartest Guys in the Room (2005)

In 1987 two oil traders made bets for Enron

"In 1987 two oil traders made bets for Enron"

Enron: The Smartest Guys in the Room (2005)

on whether the price of oil would rise or fall.

"on whether the price of oil would rise or fall."

Enron: The Smartest Guys in the Room (2005)

Oil trading is like gambling:

"Oil trading is like gambling:"

Enron: The Smartest Guys in the Room (2005)

Sometimes you win, sometimes you lose.

"Sometimes you win, sometimes you lose."

Enron: The Smartest Guys in the Room (2005)

But Enron Oil always seemed to win,

"But Enron Oil always seemed to win,"

Enron: The Smartest Guys in the Room (2005)

much to Ken Lay's delight.

"much to Ken Lay's delight."

Enron: The Smartest Guys in the Room (2005)

I tried to explain to Ken Lay

"I tried to explain to Ken Lay"

Enron: The Smartest Guys in the Room (2005)

the tremendous risk that you have in that market.

"the tremendous risk that you have in that market."

Enron: The Smartest Guys in the Room (2005)

You can lose...

"You can lose..."

Enron: The Smartest Guys in the Room (2005)

ten times your original investment.

"ten times your original investment."

Enron: The Smartest Guys in the Room (2005)

A veteran trader, Mike Muckleroy,

"A veteran trader, Mike Muckleroy,"

Enron: The Smartest Guys in the Room (2005)

was suspicious of Enron Oil's steady high profits.

"was suspicious of Enron Oil's steady high profits."

Enron: The Smartest Guys in the Room (2005)

Well this oil trading business had profits

"Well this oil trading business had profits"

Enron: The Smartest Guys in the Room (2005)

that nobody could really understand and in fact,

"that nobody could really understand and in fact,"

Enron: The Smartest Guys in the Room (2005)

that many of Ken Lay's lieutenants questioned.

"that many of Ken Lay's lieutenants questioned."

Enron: The Smartest Guys in the Room (2005)

They said this business can't be making

"They said this business can't be making"

Enron: The Smartest Guys in the Room (2005)

this much money legitimately.

"this much money legitimately."

Enron: The Smartest Guys in the Room (2005)

Something weird is going on.

"Something weird is going on."

Enron: The Smartest Guys in the Room (2005)

Something weird was going on.

"Something weird was going on."

Enron: The Smartest Guys in the Room (2005)

The first hint came from an anonymous tip

"The first hint came from an anonymous tip"

Enron: The Smartest Guys in the Room (2005)

about the president of the company,

"about the president of the company,"

Enron: The Smartest Guys in the Room (2005)

Louis Borget.

"Louis Borget."

Enron: The Smartest Guys in the Room (2005)

Mr. Borget had taken some three plus million dollars

"Mr. Borget had taken some three plus million dollars"

Enron: The Smartest Guys in the Room (2005)

of corporate funds and put it in a personal account of his.

"of corporate funds and put it in a personal account of his."

Enron: The Smartest Guys in the Room (2005)

There were offshore accounts phony books

"There were offshore accounts phony books"

Enron: The Smartest Guys in the Room (2005)

and a trail that led from the company's treasurer,

"and a trail that led from the company's treasurer,"

Enron: The Smartest Guys in the Room (2005)

Tom Mastroeni,

"Tom Mastroeni,"

Enron: The Smartest Guys in the Room (2005)

to a mysterious Lebanese speculator no one could find:

"to a mysterious Lebanese speculator no one could find:"

Enron: The Smartest Guys in the Room (2005)

M. Yass.

"M. Yass."

Enron: The Smartest Guys in the Room (2005)

What name did you suspect that was?

"What name did you suspect that was?"

Enron: The Smartest Guys in the Room (2005)

My ass, you know.

"My ass, you know."

Enron: The Smartest Guys in the Room (2005)

And M Smart, well so that's Maxwell Smart.

"And M Smart, well so that's Maxwell Smart."

Enron: The Smartest Guys in the Room (2005)

I mean, these guys are playing games

"I mean, these guys are playing games"

Enron: The Smartest Guys in the Room (2005)

Borget and Mastroeni were summoned to Houston.

"Borget and Mastroeni were summoned to Houston."

Enron: The Smartest Guys in the Room (2005)

First, they presented falsified bank records to Enron.

"First, they presented falsified bank records to Enron."

Enron: The Smartest Guys in the Room (2005)

Then they admitted they had diverted company

"Then they admitted they had diverted company"

Enron: The Smartest Guys in the Room (2005)

profits to personal accounts.

"profits to personal accounts."

Enron: The Smartest Guys in the Room (2005)

It was brought to the attention of the Enron Board.

"It was brought to the attention of the Enron Board."

Enron: The Smartest Guys in the Room (2005)

Auditors were brought in as well,

"Auditors were brought in as well,"

Enron: The Smartest Guys in the Room (2005)

to look at the whole thing.

"to look at the whole thing."

Enron: The Smartest Guys in the Room (2005)

At the board meeting,

"At the board meeting,"

Enron: The Smartest Guys in the Room (2005)

the auditors told Lay that Borget and his traders

"the auditors told Lay that Borget and his traders"

Enron: The Smartest Guys in the Room (2005)

were manipulating earnings destroying daily trading records,

"were manipulating earnings destroying daily trading records,"

Enron: The Smartest Guys in the Room (2005)

and probably gambling way beyond their limits.

"and probably gambling way beyond their limits."

Enron: The Smartest Guys in the Room (2005)

The next day we found out that

"The next day we found out that"

Enron: The Smartest Guys in the Room (2005)

Lay's decision was to basically change nothing

"Lay's decision was to basically change nothing"

Enron: The Smartest Guys in the Room (2005)

as far as the operation's concerned.

"as far as the operation's concerned."

Enron: The Smartest Guys in the Room (2005)

And the reason he gave was that this was

"And the reason he gave was that this was"

Enron: The Smartest Guys in the Room (2005)

the only part of the combined company

"the only part of the combined company"

Enron: The Smartest Guys in the Room (2005)

that was making any money and that he could not,

"that was making any money and that he could not,"

Enron: The Smartest Guys in the Room (2005)

you know, kill the golden goose.

"you know, kill the golden goose."

Enron: The Smartest Guys in the Room (2005)

The traders weren't fired, or even disciplined.

"The traders weren't fired, or even disciplined."

Enron: The Smartest Guys in the Room (2005)

Instead, Enron sent a telex to Borget:

"Instead, Enron sent a telex to Borget:"

Enron: The Smartest Guys in the Room (2005)

Please keep making us millions.

"Please keep making us millions."

Enron: The Smartest Guys in the Room (2005)

Instead of reducing Enron's risk,

"Instead of reducing Enron's risk,"

Enron: The Smartest Guys in the Room (2005)

Lay encouraged his traders to gamble more.

"Lay encouraged his traders to gamble more."

Enron: The Smartest Guys in the Room (2005)

But then their luck changed.

"But then their luck changed."

Enron: The Smartest Guys in the Room (2005)

Two months later,

"Two months later,"

Enron: The Smartest Guys in the Room (2005)

here I got this panic call that they had

"here I got this panic call that they had"

Enron: The Smartest Guys in the Room (2005)

drawn down 90 million dollars in the previous five days.

"drawn down 90 million dollars in the previous five days."

Enron: The Smartest Guys in the Room (2005)

What we could do is just try and find out

"What we could do is just try and find out"

Enron: The Smartest Guys in the Room (2005)

what kind of guerilla we had loose up there.

"what kind of guerilla we had loose up there."

Enron: The Smartest Guys in the Room (2005)

Muckleroy hopped on the next plane to New York.

"Muckleroy hopped on the next plane to New York."

Enron: The Smartest Guys in the Room (2005)

He knew Mastroeni had another set of books,

"He knew Mastroeni had another set of books,"

Enron: The Smartest Guys in the Room (2005)

and he would do whatever it took to get them.

"and he would do whatever it took to get them."

Enron: The Smartest Guys in the Room (2005)

I basically stood over Tom

"I basically stood over Tom"

Enron: The Smartest Guys in the Room (2005)

and I told him that one of two things was going to happen.

"and I told him that one of two things was going to happen."

Enron: The Smartest Guys in the Room (2005)

Either one of the trading partners

"Either one of the trading partners"

Enron: The Smartest Guys in the Room (2005)

that was crooked with Borget

"that was crooked with Borget"

Enron: The Smartest Guys in the Room (2005)

who was a German arms dealer was going to kill him,

"who was a German arms dealer was going to kill him,"

Enron: The Smartest Guys in the Room (2005)

or I was. I said 'I'll track you down

"or I was. I said 'I'll track you down"

Enron: The Smartest Guys in the Room (2005)

and find you no matter where you go.

"and find you no matter where you go."

Enron: The Smartest Guys in the Room (2005)

And sooner or later, I'll get you.'

"And sooner or later, I'll get you.'"

Enron: The Smartest Guys in the Room (2005)

The next day, Mastroeni came in with the real books.

"The next day, Mastroeni came in with the real books."

Enron: The Smartest Guys in the Room (2005)

The traders had gambled away all of Enron's reserves.

"The traders had gambled away all of Enron's reserves."

Enron: The Smartest Guys in the Room (2005)

By acting fast, Muckleroy bluffed the market,

"By acting fast, Muckleroy bluffed the market,"

Enron: The Smartest Guys in the Room (2005)

and managed to save the company.

"and managed to save the company."

Enron: The Smartest Guys in the Room (2005)

After Valhalla Ken Lay maintained that

"After Valhalla Ken Lay maintained that"

Enron: The Smartest Guys in the Room (2005)

he had been shocked that the traders

"he had been shocked that the traders"

Enron: The Smartest Guys in the Room (2005)

had gambled so recklessly.

"had gambled so recklessly."

Enron: The Smartest Guys in the Room (2005)

But Ken Lay had known all along

"But Ken Lay had known all along"

Enron: The Smartest Guys in the Room (2005)

about the risks that were taken.

"about the risks that were taken."

Enron: The Smartest Guys in the Room (2005)

He had seen the reports warning him

"He had seen the reports warning him"

Enron: The Smartest Guys in the Room (2005)

about the traders' behavior.

"about the traders' behavior."

Enron: The Smartest Guys in the Room (2005)

Since the fall of Enron, Ken Lay has said that

"Since the fall of Enron, Ken Lay has said that"

Enron: The Smartest Guys in the Room (2005)

he can't be responsible for things

"he can't be responsible for things"

Enron: The Smartest Guys in the Room (2005)

he didn't know about.

"he didn't know about."

Enron: The Smartest Guys in the Room (2005)

Sounds like what he said about Valhalla.

"Sounds like what he said about Valhalla."

Enron: The Smartest Guys in the Room (2005)

Do you believe that he didn't know?"

"Do you believe that he didn't know?""

Enron: The Smartest Guys in the Room (2005)

I can answer only for one. I can answer for Valhalla

"I can answer only for one. I can answer for Valhalla"

Enron: The Smartest Guys in the Room (2005)

because Ken Lay did in fact know about this thing.

"because Ken Lay did in fact know about this thing."

Enron: The Smartest Guys in the Room (2005)

Because I had told him myself.

"Because I had told him myself."

Enron: The Smartest Guys in the Room (2005)

The auditors adamantly told Mr. Ken Lay

"The auditors adamantly told Mr. Ken Lay"

Enron: The Smartest Guys in the Room (2005)

that the two rogue traders should be fired.

"that the two rogue traders should be fired."

Enron: The Smartest Guys in the Room (2005)

Lay read the report and he read his budget

"Lay read the report and he read his budget"

Enron: The Smartest Guys in the Room (2005)

and estimated how much they, the two rogue executives made

"and estimated how much they, the two rogue executives made"

Enron: The Smartest Guys in the Room (2005)

and if they were fired what he could lose.

"and if they were fired what he could lose."

Enron: The Smartest Guys in the Room (2005)

My conclusion was that this guy is a guy who puts earnings

"My conclusion was that this guy is a guy who puts earnings"

Enron: The Smartest Guys in the Room (2005)

before scruples rather than reacting

"before scruples rather than reacting"

Enron: The Smartest Guys in the Room (2005)

to the dishonesty right in front of him.

"to the dishonesty right in front of him."

Enron: The Smartest Guys in the Room (2005)

Mastroeni received a suspended sentence.

"Mastroeni received a suspended sentence."

Enron: The Smartest Guys in the Room (2005)

Borget was convicted of fraud, and spent one year in jail.

"Borget was convicted of fraud, and spent one year in jail."

Enron: The Smartest Guys in the Room (2005)

With his biggest moneymaker now behind bars,

"With his biggest moneymaker now behind bars,"

Enron: The Smartest Guys in the Room (2005)

Ken Lay had a problem:

"Ken Lay had a problem:"

Enron: The Smartest Guys in the Room (2005)

Who could he find to make money for Enron?

"Who could he find to make money for Enron?"

Enron: The Smartest Guys in the Room (2005)

Every year, every day,

"Every year, every day,"

Enron: The Smartest Guys in the Room (2005)

every week you have to come up with new ideas.

"every week you have to come up with new ideas."

Enron: The Smartest Guys in the Room (2005)

Ken Lay saw in Jeff Skilling the guy who had the answer to

"Ken Lay saw in Jeff Skilling the guy who had the answer to"

Enron: The Smartest Guys in the Room (2005)

what the future of the natural gas business was supposed to be.

"what the future of the natural gas business was supposed to be."

Enron: The Smartest Guys in the Room (2005)

Ken Lay is also a guy who considers himself a visionary

"Ken Lay is also a guy who considers himself a visionary"

Enron: The Smartest Guys in the Room (2005)

and he liked other people he thought of as visionaries.

"and he liked other people he thought of as visionaries."

Enron: The Smartest Guys in the Room (2005)

He liked people with big ideas.

"He liked people with big ideas."

Enron: The Smartest Guys in the Room (2005)

And Jeff Skilling was a person with the biggest ideas of all.

"And Jeff Skilling was a person with the biggest ideas of all."

Enron: The Smartest Guys in the Room (2005)

Jeff Skilling's biggest single idea was find

"Jeff Skilling's biggest single idea was find"

Enron: The Smartest Guys in the Room (2005)

a new way to deliver energy.

"a new way to deliver energy."

Enron: The Smartest Guys in the Room (2005)

Rather than be bound by the physical flow of the pipeline,

"Rather than be bound by the physical flow of the pipeline,"

Enron: The Smartest Guys in the Room (2005)

Enron would become a kind of stock market for natural gas.

"Enron would become a kind of stock market for natural gas."

Enron: The Smartest Guys in the Room (2005)

It was a magical new idea:

"It was a magical new idea:"

Enron: The Smartest Guys in the Room (2005)

Transform energy into financial instruments

"Transform energy into financial instruments"

Enron: The Smartest Guys in the Room (2005)

that could be traded like stocks and bonds.

"that could be traded like stocks and bonds."

Enron: The Smartest Guys in the Room (2005)

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