Footnote 8

(b)Nahanni310. Nahanni was another $500 million minority interest transaction that closed at yearend, this time on December 29, 1999. Citigroup again created the structure and advised Enron onthe transaction. Like the Nighthawk structure, Citigroup designed Nahanni as a vehicle for Enronto borrow $500 million that would not be reflected as debt on the company’s balance sheet.311. Citigroup and the Insiders added a special feature to Nahanni – a feature that“allowed” Enron improperly to record the $500 million as cash flow from operations instead offinancing activities. Nahanni, as the minority investor in Marengo, the consolidated subsidiaryowned by Enron, contributed $500 million in Treasury bills, instead of cash, to Marengo, which inturn contributed the Treasury bills to its wholly-owned subsidiary, Yukon. Yukon then immediatelysold the Treasury Bills, and Enron treated the proceeds of the sale as cash flow from operations.Citigroup specifically suggested using Treasury bills for this purpose.311A. Citigroup also arranged for Nahanni’s capitalization, again providing a $485 millionloan from CXC, Citigroup’s affiliate, and arranging an equity investment of $15 million. Nahanniused these funds to purchase the Treasury Bills that ultimately were contributed to Yukon. Yukonin turn sold the Treasury Bills and loaned the proceeds to Enron in exchange for a demandpromissory note in the maximum principal amount of $497,512,437.81 (the “Nahanni Note”).Unlike other minority interest financings (where the Enron demand loans were unsecured) thetransaction documents provided that the Nahanni Note would be supported by a direct-pay letter ofcredit.311B. Pursuant to a Master Credit and Reimbursement Agreement dated December 27,1999 (the “West LB Nahanni Reimbursement Agreement”), Enron agreed to reimburseWestdeutsche Landesbank Girozentrale, New York Branch (“West LB NY”) for draws on anyletters of credit issued under the Agreement. Thereafter, on December 29, 1999, West LB NY604041v1/007457-98-