Footnote 8

of which also involved Enron) and only when so instructed by Citigroup. Citigroup paid theadministrative costs of Delta, its attorney fees, and its transaction fees. The forms at Citibankestablishing a bank account for Delta listed Delta’s address as “c/o Citicorp North America, Inc.”and described the account as an “internal account” to be “controlled” by Citigroup. These formsalso identified three Citigroup employees as authorized signatories for the account. InternalCitigroup documents refer to Delta as a “shell corporation/SPV” and as a “special purpose entity.”CITI-B 0259698. According to the SEC, “Delta was a nominally capitalized SPE established byCitigroup, whose sole purpose in these transactions was to facilitate Enron’s accounting treatment.”SEC Citigroup Order at 11. As such, Delta is an alter ego of Citigroup.289. The purpose and effect of the Citigroup prepays was to allow the Insiders toimproperly record the proceeds from the prepay transactions (the prepaid amount) as cash flow fromoperating activities instead of cash flow from financing activities, and to improperly record theobligation to repay this amount as price risk management liabilities instead of debt. And that isexactly what the Insiders did. In each Citigroup prepay, the Insiders accounted for the prepaidamount in Enron’s financial records as cash flow from operations (not cash flow from financingactivities, which it was), and the obligation to repay that amount as price risk management liabilities(instead of debt, which it was).290. Citigroup knew the prepays were in substance loans to Enron and, as such, shouldhave been recorded on Enron’s financial statements as loans, not commodity trades. Citigroupinternal documents (1) describe the Roosevelt prepay as “effectively a commodity denominatedcorporate obligation,” CITI-B 0032092; (2) state candidly that in the Truman prepay, “we werebasically making a loan to [Enron],” CITI-B 0260172; and (3) generally summarize Citigroup’sprepay transactions with Enron as “oil goes in a circle so they all cancel . . . net economically likea loan,” CITI-B 235230, and “Enron’s total volume of prepays . . . represents essentially another604041v1/007457-89-