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misstatement of Enron’s financial condition by structuring the transactions, funding loans in thestructures, and serving as placement agent for equity investments in the transactions.268. Likewise, the Enron Examiner found that the forest products business transactionswere improperly accounted for at Enron; that Citigroup knew the accounting was suspect; and thatCitigroup nonetheless participated in these transactions by providing both the loans and purchasingthe equity necessary for their completion. The Bacchus forest product transaction was so out of linethat one Citigroup employee wrote: “Sounds like we made a lot of exceptions to our standardpolicies. I am sure we have gone out of our way to let them know that we are bending overbackwards for them . . . let’s remember to collect this iou when it really counts . . . .”CITI-B 0281946 (quoted in Exam. III, App. D at 124) (emphasis added). Similarly, the SundanceIndustrial deal was so egregious that the head of Citigroup’s Global Risk Management Grouprefused to approve the transaction and warned that “[t]he GAAP accounting is aggressive and afranchise risk to us if there is publicity (a la Xerox).” CITI-B 0307593 (quoted in Exam. III,App. D at 131) (emphasis added). The Enron Examiner concluded that the evidence he examinedwas “sufficient for a fact-finder to conclude that Citigroup aided and abetted certain Enron officersin breaching their fiduciary duties.” Exam. III, App. D at 148.(1) Citigroup’s relationship with Enron.269. Enron considered Citigroup to be one of its most important financial institutions.3From 1997 through 2001, Enron classified Citigroup as one of its select Tier 1 banks. During this3The Insiders defined a Tier 1 bank as one that could:i. Underwrite $1 billion in short period of timeii. Ability to lead/structure complex, mission-critical dealsiii. Deliver balance sheet for nonagented deals when needediv. Relationship driven philosophy vs. transactionalv. Account officer capable of delivering institutionvi. Strong senior management contactsvii. Well-developed distribution capabilities(continued...)604041v1/007457-80-