J effrey Skilling is in rehearsals. Tomorrow, he begins a one-man show in Houston, Texas, for which the reviews must be very, very good. There are only 12 critics who matter, but if they give a thumbs-down, he could spend the rest of his life in prison. Mr Skilling is on trial charged with 28 counts of fraud and conspiracy, but those bald numbers hardly do justice to the scale of the corporate disaster in which he and his co-defendant, Kenneth Lay, are implicated.
When Enron - the business they turned into the seventh largest company in America - was revealed as a financial con-trick in 2001, its collapse wrecked the livelihoods of 20,000 employees and rocked the public's trust in America's biggest corporations and its macho directors. It was the fraud that changed everything. Corporations would be forced to live by tough new rules and under a cloud of public cynicism, and the ripples are still changing the way America does business.
Enron was a house of cards built on arrogance and greed. Enron's chief, the amiable, grandfatherly Mr Lay, whose Enron wealth had turned him into a Houston grandee, was golfing partner to George Bush Snr and mentor to George W. His number two, Mr Skilling, was an arrogant man but perhaps with some cause: he graduated in the top five per cent of his class at Harvard Business School. To their employees they were "the smartest guys in the room". The trouble was that they were too clever by half, driven to wild schemes by the adoration of Wall Street and the power of money.
The company used every accounting trick and public relations tactic to pump up its share price. Mr Skilling and Mr Lay cashed in $500m (£287m) of Enron stock at the same time as encouraging employees to stuff their pensions with shares that would be worthless just months later. Their clever numbers guy, Andrew Fastow, created a financial structure so labyrinthine that he was able to pocket $45m without the board noticing.
The trial of Mr Skilling and Mr Lay finally calls the two men at the top of the company to account for its failure. The government has wrung 19 guilty pleas from employees further down the ladder, and from bankers whose deals with Enron helped create the illusion of financial health. Only one, the former treasurer Ben Glisan, is serving time. Most are yet to be sentenced, and three British bankers are still fighting extradition.
Mr Lay says he and his family are still "grieving" over the collapse of the company and that he has lost much of his fortune. His wife Linda opened a second-hand shop to sell the couple's possessions - including a $4,000 armoire and a mahogany bed - and opened her heart on television talk shows. Mr Skilling elicits less sympathy, despite being the only one of the most senior executives not to plead the fifth amendment - that no person should be forced to witness against himself - when Congress investigated Enron's collapse. This is the man who dismissed a sceptical analyst as an "asshole", who spoofed Enron's close-to-the-wire accounting policies as "hypothetical future value accounting by which we can add gazillions to the bottom line", and who responded to a Harvard admissions tutor who asked if he was smart by saying, "Yes, I am fucking smart."
The tale is weaved afresh in a feature-length documentary, Enron: the Smartest Guys in the Room, released here at the end of the month. Alex Gibney's film is cast in the same tradition of polemical documentary-making as Michael Moore's Fahrenheit 9/11 or the anti-fast food movie Super Size Me, although it is structured as tragedy rather than played for bitter laughs.
Enron went from a $70bn stock market goliath to bankruptcy in less than a year. To the outside world, it had looked an extraordinary success story: an empire of power plant and pipeline businesses across the world with, at its humming core, an operation trading energy supply contracts on the financial markets.
But Fastow, as chief financial officer, had set up a series of his own companies to do side-deals with Enron that were allowing Enron to record profits immediately from assets that might take years to generate real cash. Fastow's companies had exotic names - Jedi, Chewco, and the Raptors, for example - but a simple purpose: to inflate the company's profits. As long as the share price kept going up, the financial deals made sense. What none of the banks which helped or the Enron employees who were involved seemed to be able to conceive, was that the stock might one day stop defying gravity. The moment Enron's shareholders and trading partners lost confidence, the company was doomed to be engulfed by $30bn of hidden debt.
Fastow told the Houston jury last month: "I was extremely greedy and I lost my moral compass." Gibney's film argues that greed was a qualification for a job at Enron, and you checked your moral compass at the door. This was a company which displayed its share price in the lifts, and where clever schemes for getting that share price up became more important than running a real business.
Fastow secretly creamed off $45m from side-deals with Enron, and he has limited his sentence to a likely 10-year jail term only by agreeing to testify against his former bosses. He will go down in the history of infamy as the man who let his wife go to prison for a year for filing a false tax return because he did not reveal to her the true provenance of this income. Remarkably, they remain married.
Wall Street was stunned when Mr Skilling announced on 14 August, 2001, that he was quitting as chief executive. He said he wanted to practise motocross and spend time with the children. His critics say he was trying to get out before the edifice collapsed. Certainly Sherron Watkins, a ballsy underling in Fastow's finance department, thought there was a more sinister reason. She has emerged as the heroine of the Enron saga. She wrote a memo to Ken Lay, who returned from semi-retirement to take over Mr Skilling's job, in which she blew the whistle on some of the most dubious accounting practices. Enron, she predicted, could "implode in a wave of accounting scandals". Her prescience earned her a starring role in hearings into the Enron collapse on Capitol Hill, a best-selling book deal and a new life on the corporate lecture circuit.
In that feverish autumn, as regulators began to question Enron's finances, too, Arthur Andersen, the auditing firm charged with ensuring it produced accurate accounts, was alleged to have destroyed documents to cover up its complicity in the scandal. The firm's conviction for obstructing justice was overturned, but too late to save it. With its reputation shredded, it was broken up and sold off, wiping out a historic name from the accounting profession.
Fastow was fired shortly after Mr Skilling's resignation, when the board finally discovered how he had been enriching himself, but Mr Lay continued making upbeat public comments about Enron's prospects. Natural chirpiness? Positive spin? Duped innocent? Outright liar? The Houston jury is to decide on six charges against him.
It was on 2 December, 2001, that Enron finally admitted it was bust. Its 20,000 employees were told they would lose their jobs, their health insurance and their pensions. Its shareholders were told their investment was worthless. These victims have limited hope of reclaiming some lost money from outstanding lawsuits, including those against the banks involved in the side-deals between Fastow and Enron.
Enron cemented the words "corporate" and "greed" together in the popular imagination. A rollercoaster entitled the "Enron ride of broken dreams" appeared in The Simpsons, and a blizzard of shredded documents became a snow scene in a festive Heineken advert offering "happy holidays to all those who haven't been naughty this year". Faced with the need to shore up confidence in corporate America, politicians were galvanised into action. No longer can companies' financial statements be taken on trust; from now on, directors have had to sign off personally on their accuracy.
There have also been tough new rules on how accounts are to be checked, adding millions to the costs of running a public company in the US. Supporters of the legislation say it is a price worth paying to protect investors and employees, but the London stock market has seen an influx of overseas companies saying it is now unattractive to float their shares in New York. Bankers here counter that more gentlemanly rules for overseeing companies protect London from an Enron-style catastrophe.
Mr Skilling will take the stand to say that Fastow was lying when he testified that his boss was well aware what he was up to. The jury's choice is: which of these guys do you believe? The legal commentators, who have been impressed by the strength of the prosecution's case, say Mr Skilling will have to be remorseful, humble and human if he is to win.
As the defence's questioning ground on last week, conspiracy theorists in the court thought their time-wasting was a ploy to give Mr Skilling an extra weekend to rehearse his difficult act. In the corridor outside, his lawyer Daniel Petrocelli - famed for winning $34m from O J Simpson in the civil trial that found him liable for the death of his wife - was singing "Monday, Monday" by The Mamas and the Papas with a big grin on his face. As viewers of The Smartest Guys in the Room will see, in the case of Enron, conspiracy theories are often pretty plausible.
THE CAST LIST
Kenneth Lay, 63
THE CHAIRMAN: Son of a Missouri Baptist minister, he became one of the US's highest paid directors at the peak of Enron's power. Was talked of as a potential energy minister under President Bush, with whose family he has close ties. His avuncular manner and role as cheerleader for Texan business shielded his reputation until his 2002 indictment. Charged with six counts of fraud and conspiracy.
Sherron Watkins, 46
THE WHISTLEBLOWER: As a vice-president, working in the finance department, her memo to Ken Lay asked: "Has Enron become a risky place to work?" and warned the company "could implode in a wave of accounting scandals". The only person to have drawn attention to the shaky financial foundations of Enron, she has a new career as a writer and speaker on good corporate governance.
THE CHIEF EXECUTIVE: Characterised as a nerd, and a "former loner", Skilling did more than anyone to foster Enron's testosterone-fuelled "growth at any cost" culture. His resignation in 2001 was the first outward sign all was not well. He cashed in $200m in shares, and is accused of encouraging the frauds in the finance department. Charged with 28 counts of fraud and conspiracy.
Andrew Fastow, 44
THE CHIEF FINANCIAL OFFICER: The accounting wizard's plea bargain was the most significant breakthrough for the Justice Department. Fastow masterminded the transactions that kept profits high even when there was little cash coming in, and he pocketed $45m. His wife was jailed after telling the taxman the money was a gift. Says he "lost his moral compass". He agreed to serve 10 years for fraud.Reuse content