Enron: The Smartest Guys in the Room Page #3

between a sidewinder

and a timber rattlesnake.

Lay was closer to the father.

But while

he was governor of Texas

George W. Bush was

only too happy to

make phone calls for Ken Lay.

This absolutely has

no precedent.

This is by far and away

the most important,

major relationship of

a Presidential family

with a single corporation

in American history.

When Rich Kinder,

one of Enron's Executives,

left the company,

Lay arranged

for a video valentine.

Rich, I've... been asked

to think of one thing

I could say to you

on your departure from Enron.

It'd be this,

'Don't leave Texas. '

Rich, you have been fantastic

to the Bush family.

I don't think

anybody did more than

you did to support George and,

of course,

in this stage of my life,

and Barbara's too,

that's what really matters.

Your family and your friends.

Early on, George Bush, Sr.

Helped secure billions

in government subsidies

for Enron International.

And he helped promote Lay as

deregulation's

Ambassador-at-Large.

Enron is a company...

that deals with everyone

with absolute integrity.

We want people to leave

the transaction with Enron

thinking that

they've been dealt with

in the highest possible way

as far as integrity

and truthfulness.

He always wrapped himself

in the cloak of moral rectitude.

But there was one episode,

early on,

that raised questions

about whether he was actually

walking the walk

This was the Enron oil scandal,

also know as

the Valhalla Scandal.

While you were

at Arthur Anderson,

were you involved

in an investigation

at a company called Enron Oil?"

Yes, I was.

The issue

with the company in 1997

involved the misappropriation

of moneys by two traders.

In 1987 two oil traders

made bets for Enron

on whether the price of

oil would rise or fall.

Oil trading is like gambling:

Sometimes you win,

sometimes you lose.

But Enron Oil

always seemed to win,

much to Ken Lay's delight.

I tried to explain to Ken Lay

the tremendous risk that

you have in that market.

You can lose...

ten times your

original investment.

A veteran trader,

Mike Muckleroy,

was suspicious of Enron Oil's

steady high profits.

Well this oil trading

business had profits

that nobody could really

understand and in fact,

that many of Ken Lay's

lieutenants questioned.

They said this

business can't be making

this much money legitimately.

Something weird is going on.

Something weird was going on.

The first hint came

from an anonymous tip

about the president

of the company,

Louis Borget.

Mr. Borget had taken

some three plus million dollars

of corporate funds and put it

in a personal account of his.

There were offshore

accounts phony books

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