Footnote 8

c. Barclays knowingly assisted the Insiders in misstating Enron’s financialcondition.390. Barclays’ participation in the Insiders’ scheme was essential, in part because it startedearly. By October 1998, Enron already owed Barclays over $1.5 billion. Several high-rankingBarclays employees have admitted Barclays knew from early on that the Insiders were usingmultiple and varied financing structures to hide the true nature of Enron’s financial condition. SeeExam. III, App. F at 9 (citing witness statements). Barclays understood the Insiders’ motives andthe transactions’ effect on Enron’s financial statements. Barclays Director John Meyer has admittedthat no outsider could evaluate the effect the Insiders’ structures had on Enron’s financials. Ofcourse, as a participant in the scheme, Barclays could. For example, by early 1999, Barclays knewthat the Insiders’ structured financings added $4.6 billion to Enron’s reported debt for 1998 of$7.4 billion. Barclays well understood that the additional debt, properly recorded, increased Enron’sdebt to total capitalization ratio from 41.9% to 63%.391. Barclays chose to remain deeply involved in the Insiders’ scheme despite knowingexactly what the Insiders were doing. Seven transactions with Barclays were particularlysignificant: J.T. Holdings, Nikita, Chewco, SO2, and three prepays. The Enron Examiner found thatall seven were reported improperly by the Insiders, that Barclays participated knowing the sevenwould be reported improperly, and that as a result of the transactions, a total amount of $410 millionwas improperly reported as “income” and $1 billion improperly reported as “cash flow fromoperations.” The Enron Examiner also concluded that $1.77 billion of debt was improperly kept offEnron’s 1997-2001 financial statements because of these transactions.(1) Barclays’ relationship with Enron.392. Barclays is one of the largest financial services groups in the UK. Its involvementwith Enron was extensive and lucrative. It attained Tier 1 status in 1993, and kept it until Enron’s604041v1/007457-130-