Book – The Smartest Guys in the Room

Continuing his obsession with financial irregularity and corruption at the highest level, Steve Taylor-Bryant delves into the murky dealings that brought down Enron...

Everyone's heard of Enron, they probably don't know why but they have and that's how powerful their massive and rapid decline was on the world’s psyche. However, learning more about the accounting games and corporate mistakes might not sound like your cup of tea but I have found a book that is gripping and exciting, explains everything really well without losing me in baffling mathematics and, with the success of The Big Short just recently, is prime for a movie. The Smartest Guys in the Room by renowned journalists Bethany McLean and Peter Eklind is an astonishing account of the rise and fall of one of the world’s biggest companies and the massive knock on effect their business practices and eventual doom had on the rest of Wall Street and the world’s economic stability. The book starts with quite a long who's who and I'll admit to worrying that I'd never remember the details as the book went on but, with its almost novel style rather than academic paper feel, each character and event is easily followed and after just a couple of chapters I was in tune with what was going on and who was doing what.

It's easy to forget, due to massive egotism, corrupt accountancy, brutal and illegal working practices and epic proportions of panic and ineptitude, that Enron was actually birthed by a very smart man whose ideas were revolutionary and changed certain markets for the better. Ken Lay pretty much redefined the natural gas market and some of the procedures he put in place brought an often unloved product to the forefront of energy trading as a cleaner, more reliable alternative to oil and coal. This is the platform that launched Enron and built them into the huge company they were but, once successful, Lay pretty much buried his head in the sand and lets the COO Jeff Skilling pretty much run roughshod over the world’s markets. I started the book with a modicum of respect for Ken Lay, I foolishly thought that this was perhaps a tale of a once brilliant man that knew one particular market inside out and fell from grace when he tried to repeat the trick in markets not so much to his specialised thinking. However I left the book sickened that a man like Lay could just sit back and count his money and enjoy the high life whilst the lunatics ran the trillion dollar asylum.

As with most brilliant books about big business practises or financial irregularities written by top journalists, The Smartest Guys in the Room excels when it’s speaking of its characters. The arrogance and criminal acts that are contained within human beings constantly surprises me but at the core of Enron’s failings was the weakness shown by pretty much everyone on the payroll of Enron, their accountants Arthur Anderson and the somewhat (yet again) missing SEC that should have been overseeing standards that could have resulted in the world’s biggest ever financial failing by one company being prevented.

There is a lot to take in reading The Smartest Guys in the Room. There is the rise and rise and then inevitable fall from a great height of a famous and huge company. There is the sheer hatred you will have for the despicable cast of men and women that let greed and power corrupt everything it touched. There are the shoddy practices of other companies that wanted to bask in the glorious sunshine of Enron. There is also the role, or lack of, that a government agency, instructed to stop this happening and their obvious absence and inability to act, plays in yet another financial failing. Whenever you read a book of corruption and greed and wonder how it got that bad you’ll find the Securities and Exchange Commission have somehow failed to act somewhere. It won’t be for everyone, and there are a lot of facts and figures involved, but if you like to learn how some of the most powerful companies in the world actually run and what part power and money play in a massive fall then The Smartest Guys in the Room is well worth a read. Elkind and McLean write a narrative more in the style of a good thriller or a great screenplay rather than an academic manuscript and that allows a great way in if a reader is just starting out in this subject matter but also a great experience for those of us that are rabid fans of what is beginning to feel like a fictional genre.

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