Footnote 8

395. On November 14, 2000, Barclays Director Richard Williams advised others atBarclays that he had received the necessary assurance:We have had a number of conversations with Enron about the transaction risks andhave agreed to go forward on the basis of explicit verbal support from the company’sTreasurer. Specifically, Ben Glisan will commit to us that under all circumstancesEnron will execute its purchase option at a price sufficient to repay in full the holdersof the B Notes and Certificates.(quoted in Exam. III, App. F at 23). Glisan’s assurance was exactly what Barclays needed. OnDecember 7, 2000, Barclays made its equity investment by purchasing $1.3 million of C TrustCertificates and contributing them to the SPE.396. Barclays participated in the J.T. Holdings transaction knowing that Glisan’s verbalassurance of repayment meant that less than 3% of the equity would be at risk. (Barclays’certificates were one part of the $3.3 million in trust certificates that made up the 3% equitycomponent.) Barclays knew, as a result, that the transaction would not be entitled to off-balancesheet accounting treatment. Barclays also knew the Insiders would ignore that fact, and would treatthe transactions as properly off-balance sheet. Of course, Barclays was right. The Insiders recordedthe transactions off-balance sheet and, as a result, $106.2 million in debt was not properly reportedon Enron’s financial statements.(3) Nikita.397. Nikita – a FAS 140 transaction – raised the same issue as J.T. Holdings. Barclaysknew that the trust structure in the transaction had to include at least 3% “at-risk” equity in orderfor it not to be consolidated on Enron’s balance sheet. Again, however, Barclays demanded andreceived verbal assurances from the Insiders that took the risk out of the equity investment andthereby invalidated the off-balance sheet accounting treatment. Nikita represented $71.9 millionof debt improperly kept off Enron’s financial statements.604041v1/007457-132-