Inside Major Corporate Accounting Scandals | Bigger than Enron (Full Documentary) | Frontline (Pbs)

Enron’s spectacular collapse in the early 2000s was at the time the biggest financial scandal in U.S. history. It didn’t happen in a vacuum — and it revealed systemic problems far beyond a single company. (Aired 2002)

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In the 2002 documentary “Bigger Than Enron,” Pulitzer Prize-winning journalist Hedrick Smith looked at Enron’s implosion and asked, “Where were the watchdogs who were supposed to warn us when companies were playing fast and loose with their books — the stock analysts, lawyers, bankers, Securities and Exchange Commission? Above all, where were the accountants?”

“Bigger Than Enron” investigated those questions in detail, offering an in-depth look at where the U.S. financial regulation landscape stood in June 2002 after Enron’s collapse.
The documentary is now streaming on YouTube for the first time as part of an effort to make FRONTLINE’s multi-decade reporting archive widely accessible.

In the film, experts told Smith that what happened at Enron — a cozy collaboration between the company and its accounting firm, Arthur Andersen, that enabled Enron to overstate its profits — was far from anomalous. Smith reported that in what was described as the “go-go ‘90s,” the drive for profits was in full swing, and big accounting firms regularly worked hand-in-glove with clients and Wall Street to find loopholes in accounting rules that made companies look more successful than they really were.

“This is day-to-day business operations in accounting firms and on Wall Street,” Lynn Turner, a former Wall Street partner at an accounting firm before becoming the SEC's chief accountant, said of such practices at the time. “There is nothing extraordinary, nothing unusual in that respect, with respect to Enron.”

“Bigger Than Enron” examined three specific cases involving Andersen where misleading or fraudulent accounting practices caused enormous investor losses — at Sunbeam, Waste Management, and finally, Enron — and explored the downfall of Andersen, a firm that had previously built its reputation on rock-ribbed integrity.

The documentary also looked at how, in the decade leading up to Enron, accounting and financial industry lobbyists had successfully flexed their muscle on Capitol Hill in three battles: the fight over tort reform, the fight over stock options, and the war over a SEC attempt to rein in conflicts of interest by forcing accounting firms to separate their auditing and consulting practices.

Visit pbs.org/frontline to read about legal and regulatory developments since this documentary aired, including the Supreme Court’s 2005 overturning of Arthur Andersen’s obstruction of justice conviction.

“Bigger Than Enron” was a FRONTLINE coproduction with Hedrick Smith Productions. The writer, producer and director was Marc Shaffer. The producer and correspondent was Hedrick Smith. The executive editor of FRONTLINE was Louis Wiley Jr. The executive producer of FRONTLINE was David Fanning.
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CHAPTERS:

0:00 - Prologue
1:18 - The Roots of Enron’s Spectacular Collapse
15:38 - Al Dunlap and the Sunbeam Scandal
24:18 - Inside the Accounting Industry’s Tort Reform Battle
28:26 - A Late-’90s ‘Explosion’ in Major Accounting Failures
30:03 - The Waste Management Scandal
35:07 - The Fight on Capitol Hill Over Auditor Independence
41:50 - Arthur Andersen and the Enron Scandal
52:53 - Credits
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