Footnote 8

511. CIBC knew that in every FAS 140 transaction, the Insiders sought to borrow moneyfor Enron’s use without adding debt to Enron’s balance sheet. As a result, CIBC also knew that thegoal of every FAS 140 transaction was to avoid consolidating the borrower-SPE on Enron’sfinancial statements. CIBC thwarted that goal every time it required – and received – the Insiders’assurance that CIBC’s equity investment would be repaid. CIBC fully understood the ramificationsof what it was doing, and so allowed the Insiders to keep their promises oral, not written. However,CIBC recorded the fact of them internally. For example, on June 21, 2001, one CIBC employeewrote to others:Unfortunately there can be no documented means of guaranteeing the equity or anyshortfall or the sale accounting treatment is affected. We have a generalunderstanding with Enron that any equity loss is a very bad thing. They have beentold that if we sustain any equity losses, we will no longer do these types oftransactions with them. We have done many “trust me” equity transactions withEnron over the last 3 years and have sustained no losses to date. If there has beena case where the value of the asset has been in question, Enron has repurchased theasset at par plus our accrued yield.AB0000470387 (quoted in Exam. III, App. H at 55-56) (emphasis in original). CIBC documentsunequivocally demonstrate that the Insiders assured repayment of CIBC’s “equity” investment inthe FAS 140 transactions. The internal credit memorandum for the Nimitz transaction stated that“executive management at Enron has represented that this money . . . will absolutely be repaid.”CIBC 1045206 (quoted in Exam. III, App. H at 6-7) (emphasis added). Similarly, a CIBC creditmemorandum for the Hawaii transaction acknowledged that “Enron is Not permitted to ASSUREa repurchase of our equity (though this is our undocumented ‘understanding’ with the CFO).” CIBC1044979 (quoted in Exam. III, App. H at 7) (emphasis added). CIBC employees involved in theFAS 140 transactions with Enron got the point. CIBC’s Risk Management Vice President, ColleteDelaney, the individual who presented most of Enron’s transactions to the CIBC Credit Committeefrom 1997 until 2000, testified that she understood that if such “verbal assurances” had been put in604041v1/007457-167-