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

that the stock analysts had missed.

"that the stock analysts had missed."

Enron: The Smartest Guys in the Room (2005)

By and large, the analysts admitted to us,

"By and large, the analysts admitted to us,"

Enron: The Smartest Guys in the Room (2005)

in person, 'it's a black box. You have to take it on faith.

"in person, 'it's a black box. You have to take it on faith."

Enron: The Smartest Guys in the Room (2005)

'Who knows where the earnings come from?

"'Who knows where the earnings come from?"

Enron: The Smartest Guys in the Room (2005)

They just pop out.

"They just pop out."

Enron: The Smartest Guys in the Room (2005)

And all we know is, they're always good.'

"And all we know is, they're always good.'"

Enron: The Smartest Guys in the Room (2005)

And I kept pointing out, well,

"And I kept pointing out, well,"

Enron: The Smartest Guys in the Room (2005)

yeah, isn't that the whole point of...

"yeah, isn't that the whole point of..."

Enron: The Smartest Guys in the Room (2005)

if the black box is there to fool you,

"if the black box is there to fool you,"

Enron: The Smartest Guys in the Room (2005)

the numbers are always going to be good,

"the numbers are always going to be good,"

Enron: The Smartest Guys in the Room (2005)

until they're not.

"until they're not."

Enron: The Smartest Guys in the Room (2005)

I'm not a beat reporter,

"I'm not a beat reporter,"

Enron: The Smartest Guys in the Room (2005)

so I would have had no reason to look at Enron.

"so I would have had no reason to look at Enron."

Enron: The Smartest Guys in the Room (2005)

But Jim Chanos mentioned to me that I should take a closer

"But Jim Chanos mentioned to me that I should take a closer"

Enron: The Smartest Guys in the Room (2005)

look at Enron's financial statements.

"look at Enron's financial statements."

Enron: The Smartest Guys in the Room (2005)

And it wasn't clear from Enron's financial statements that

"And it wasn't clear from Enron's financial statements that"

Enron: The Smartest Guys in the Room (2005)

there was fraud here.

"there was fraud here."

Enron: The Smartest Guys in the Room (2005)

But what was clear is that something didn't add up.

"But what was clear is that something didn't add up."

Enron: The Smartest Guys in the Room (2005)

In March 2001, Bethany Mclean,

"In March 2001, Bethany Mclean,"

Enron: The Smartest Guys in the Room (2005)

a reporter with Fortune magazine,

"a reporter with Fortune magazine,"

Enron: The Smartest Guys in the Room (2005)

first raised questions about Enron's financial condition.

"first raised questions about Enron's financial condition."

Enron: The Smartest Guys in the Room (2005)

She asked a simple question

"She asked a simple question"

Enron: The Smartest Guys in the Room (2005)

in the article that no one could seem to answer,

"in the article that no one could seem to answer,"

Enron: The Smartest Guys in the Room (2005)

'how exactly does Enron make its money? '

"'how exactly does Enron make its money? '"

Enron: The Smartest Guys in the Room (2005)

You got very upset with her, didn't you?

"You got very upset with her, didn't you?"

Enron: The Smartest Guys in the Room (2005)

I very specifically remember the telephone conversation

"I very specifically remember the telephone conversation"

Enron: The Smartest Guys in the Room (2005)

that I had with... the Fortune reporter.

"that I had with... the Fortune reporter."

Enron: The Smartest Guys in the Room (2005)

She called up and started asking some very,

"She called up and started asking some very,"

Enron: The Smartest Guys in the Room (2005)

very specific questions about accounting treatment on things.

"very specific questions about accounting treatment on things."

Enron: The Smartest Guys in the Room (2005)

I am not an accountant. And I could not answer them.

"I am not an accountant. And I could not answer them."

Enron: The Smartest Guys in the Room (2005)

He became really, really agitated.

"He became really, really agitated."

Enron: The Smartest Guys in the Room (2005)

He said that people who raise questions like this

"He said that people who raise questions like this"

Enron: The Smartest Guys in the Room (2005)

were just trying to throw rocks at the company.

"were just trying to throw rocks at the company."

Enron: The Smartest Guys in the Room (2005)

And that I was not ethical

"And that I was not ethical"

Enron: The Smartest Guys in the Room (2005)

because I hadn't done enough homework.

"because I hadn't done enough homework."

Enron: The Smartest Guys in the Room (2005)

And if I had done enough homework,

"And if I had done enough homework,"

Enron: The Smartest Guys in the Room (2005)

I would understand how off-base my questions were.

"I would understand how off-base my questions were."

Enron: The Smartest Guys in the Room (2005)

Mr. Skilling, it appears as

"Mr. Skilling, it appears as"

Enron: The Smartest Guys in the Room (2005)

if you were trying to bully someone

"if you were trying to bully someone"

Enron: The Smartest Guys in the Room (2005)

who was asking very basic questions about Enron.

"who was asking very basic questions about Enron."

Enron: The Smartest Guys in the Room (2005)

I said... said to her

"I said... said to her"

Enron: The Smartest Guys in the Room (2005)

I have got six minutes left

"I have got six minutes left"

Enron: The Smartest Guys in the Room (2005)

before I have to be in a meeting.

"before I have to be in a meeting."

Enron: The Smartest Guys in the Room (2005)

And I can't get into the details.

"And I can't get into the details."

Enron: The Smartest Guys in the Room (2005)

And I'm not an accountant.'

"And I'm not an accountant.'"

Enron: The Smartest Guys in the Room (2005)

And she said, 'well, that's fine.

"And she said, 'well, that's fine."

Enron: The Smartest Guys in the Room (2005)

We're going to do the article anyway.'

"We're going to do the article anyway.'"

Enron: The Smartest Guys in the Room (2005)

And I said, 'if you do that,

"And I said, 'if you do that,"

Enron: The Smartest Guys in the Room (2005)

I personally think that's unethical.'

"I personally think that's unethical.'"

Enron: The Smartest Guys in the Room (2005)

And then the next day...

"And then the next day..."

Enron: The Smartest Guys in the Room (2005)

Let me interrupt you. Our chief financial officer

"Let me interrupt you. Our chief financial officer"

Enron: The Smartest Guys in the Room (2005)

and our chief accounting officer

"and our chief accounting officer"

Enron: The Smartest Guys in the Room (2005)

flew to New York at Enron's expense, to sit down,

"flew to New York at Enron's expense, to sit down,"

Enron: The Smartest Guys in the Room (2005)

not with the editors,

"not with the editors,"

Enron: The Smartest Guys in the Room (2005)

but to sit down with the reporter on that story,

"but to sit down with the reporter on that story,"

Enron: The Smartest Guys in the Room (2005)

and help her understand the questions that she was asking.

"and help her understand the questions that she was asking."

Enron: The Smartest Guys in the Room (2005)

And the next day we sat in this small,

"And the next day we sat in this small,"

Enron: The Smartest Guys in the Room (2005)

dark, windowless conference room for about three hours,

"dark, windowless conference room for about three hours,"

Enron: The Smartest Guys in the Room (2005)

going through the various aspects of the company's business.

"going through the various aspects of the company's business."

Enron: The Smartest Guys in the Room (2005)

And I'll never forget this.

"And I'll never forget this."

Enron: The Smartest Guys in the Room (2005)

When the interview was over,

"When the interview was over,"

Enron: The Smartest Guys in the Room (2005)

the other two executives packed up

"the other two executives packed up"

Enron: The Smartest Guys in the Room (2005)

their things and had left the room,

"their things and had left the room,"

Enron: The Smartest Guys in the Room (2005)

and Andy Fastow turned around and looked at my editor and me,

"and Andy Fastow turned around and looked at my editor and me,"

Enron: The Smartest Guys in the Room (2005)

and said, 'I don't care what you write about the company,

"and said, 'I don't care what you write about the company,"

Enron: The Smartest Guys in the Room (2005)

just don't make me look bad.'

"just don't make me look bad.'"

Enron: The Smartest Guys in the Room (2005)

And Fastow had good reasons for not wanting to look bad.

"And Fastow had good reasons for not wanting to look bad."

Enron: The Smartest Guys in the Room (2005)

There were these partnerships that were run by Andy Fastow

"There were these partnerships that were run by Andy Fastow"

Enron: The Smartest Guys in the Room (2005)

that were doing business with Enron.

"that were doing business with Enron."

Enron: The Smartest Guys in the Room (2005)

And these were disclosed

"And these were disclosed"

Enron: The Smartest Guys in the Room (2005)

in the company's financial statements.

"in the company's financial statements."

Enron: The Smartest Guys in the Room (2005)

But I didn't mention them in the story I wrote,

"But I didn't mention them in the story I wrote,"

Enron: The Smartest Guys in the Room (2005)

because I thought,

"because I thought,"

Enron: The Smartest Guys in the Room (2005)

well, the accountants and the board of directors

"well, the accountants and the board of directors"

Enron: The Smartest Guys in the Room (2005)

have said that this is okay.

"have said that this is okay."

Enron: The Smartest Guys in the Room (2005)

So I must be crazy to think there's anything wrong with this.

"So I must be crazy to think there's anything wrong with this."

Enron: The Smartest Guys in the Room (2005)

The story I ran was actually pretty meek.

"The story I ran was actually pretty meek."

Enron: The Smartest Guys in the Room (2005)

The title was 'ls Enron Overpriced? '

"The title was 'ls Enron Overpriced? '"

Enron: The Smartest Guys in the Room (2005)

But in the end, I couldn't prove that

"But in the end, I couldn't prove that"

Enron: The Smartest Guys in the Room (2005)

it was anything more than an overvalued stock.

"it was anything more than an overvalued stock."

Enron: The Smartest Guys in the Room (2005)

And I was probably too naive to suspect that it was anything...

"And I was probably too naive to suspect that it was anything..."

Enron: The Smartest Guys in the Room (2005)

anything more than that.

"anything more than that."

Enron: The Smartest Guys in the Room (2005)

And was her article critical?

"And was her article critical?"

Enron: The Smartest Guys in the Room (2005)

Yes it was.

"Yes it was."

Enron: The Smartest Guys in the Room (2005)

The Fortune magazine article that's out the headline is,

"The Fortune magazine article that's out the headline is,"

Enron: The Smartest Guys in the Room (2005)

'ls Enron's Stock Overvalued? '

"'ls Enron's Stock Overvalued? '"

Enron: The Smartest Guys in the Room (2005)

The gist of the article is that

"The gist of the article is that"

Enron: The Smartest Guys in the Room (2005)

Enron is sort of a black box...

"Enron is sort of a black box..."

Enron: The Smartest Guys in the Room (2005)

which, sorry, it's true.

"which, sorry, it's true."

Enron: The Smartest Guys in the Room (2005)

I mean, it's just difficult for us

"I mean, it's just difficult for us"

Enron: The Smartest Guys in the Room (2005)

to show people the specifics of how money flows through,

"to show people the specifics of how money flows through,"

Enron: The Smartest Guys in the Room (2005)

particularly the wholesale business.

"particularly the wholesale business."

Enron: The Smartest Guys in the Room (2005)

The entire reason that this analysis

"The entire reason that this analysis"

Enron: The Smartest Guys in the Room (2005)

was done by Fortune magazine

"was done by Fortune magazine"

Enron: The Smartest Guys in the Room (2005)

is because Business Week had a favorable article

"is because Business Week had a favorable article"

Enron: The Smartest Guys in the Room (2005)

about Enron the week before.

"about Enron the week before."

Enron: The Smartest Guys in the Room (2005)

And there's this competition with the news...

"And there's this competition with the news..."

Enron: The Smartest Guys in the Room (2005)

the news magazines have, where one says something good,

"the news magazines have, where one says something good,"

Enron: The Smartest Guys in the Room (2005)

the other one has to come and find something bad.

"the other one has to come and find something bad."

Enron: The Smartest Guys in the Room (2005)

So I think that was kind of the genesis of it.

"So I think that was kind of the genesis of it."

Enron: The Smartest Guys in the Room (2005)

So the criticism, I think, is kind of ridiculous.

"So the criticism, I think, is kind of ridiculous."

Enron: The Smartest Guys in the Room (2005)

When Bethany McLean at Fortune

"When Bethany McLean at Fortune"

Enron: The Smartest Guys in the Room (2005)

started analyzing cash flows,

"started analyzing cash flows,"

Enron: The Smartest Guys in the Room (2005)

and she had this wonderful article saying,

"and she had this wonderful article saying,"

Enron: The Smartest Guys in the Room (2005)

'take a look at first quarter, second quarter, third quarter,

"'take a look at first quarter, second quarter, third quarter,"

Enron: The Smartest Guys in the Room (2005)

and end of year cash flows.'

"and end of year cash flows.'"

Enron: The Smartest Guys in the Room (2005)

There's a reason she didn't invest in Enron

"There's a reason she didn't invest in Enron"

Enron: The Smartest Guys in the Room (2005)

'cause the financials didn't make sense.

"'cause the financials didn't make sense."

Enron: The Smartest Guys in the Room (2005)

But you have to be willing to say

"But you have to be willing to say"

Enron: The Smartest Guys in the Room (2005)

that the emperor doesn't have any clothes.

"that the emperor doesn't have any clothes."

Enron: The Smartest Guys in the Room (2005)

And this emperor was pretty powerful.

"And this emperor was pretty powerful."

Enron: The Smartest Guys in the Room (2005)

We are going to unveil this morning

"We are going to unveil this morning"

Enron: The Smartest Guys in the Room (2005)

a new corporate vision.

"a new corporate vision."

Enron: The Smartest Guys in the Room (2005)

Okay, you ready? One, two, three.

"Okay, you ready? One, two, three."

Enron: The Smartest Guys in the Room (2005)

How's this?

"How's this?"

Enron: The Smartest Guys in the Room (2005)

It's really hard to know

"It's really hard to know"

Enron: The Smartest Guys in the Room (2005)

when Enron first crossed the line into outright fraud.

"when Enron first crossed the line into outright fraud."

Enron: The Smartest Guys in the Room (2005)

But there isn't any doubt

"But there isn't any doubt"

Enron: The Smartest Guys in the Room (2005)

about who the guy was who led them there.

"about who the guy was who led them there."

Enron: The Smartest Guys in the Room (2005)

It was a protege of Jeff Skilling's

"It was a protege of Jeff Skilling's"

Enron: The Smartest Guys in the Room (2005)

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