Footnote 8

achieve accounting objectives, including specifically off-balance sheet treatment, without thespecific approval of a new Merrill Lynch committee established to review structured financetransactions. Id. at Exhibit A.531. The same day that Merrill Lynch dodged indictment, a federal grand jury did indictthree of its employees for conspiracy to commit wire fraud in connection with the Nigerian Bargetransaction. Count One, Indictment in United States v. Bayly, CR No. H-03-363 (S.D. Tex. Sept. 17,2003). One of the three, James Brown, was also indicted for perjury and obstruction of justice forlying to the grand jury about an oral promise Fastow made to Merrill Lynch to repurchase theNigerian Barges at an agreed-upon rate of return. Id. at Counts Two and Three. According to theindictment, the other two employees, Bayly and Furst, also gave false testimony to the SEC and/orthe PSI about the unwritten promise from Enron in the Nigerian Barge transaction. Id. at 18, 21,23. The indictment alleges that (1) Merrill Lynch agreed “to serve as a temporary buyer” of theNigerian barges from Enron ( 10); (2) the purpose of the agreement was to enable Enron to “recordearnings and cash flow in 1999 and thus appear more profitable” (id.); (3) Merrill Lynch’s phonypurchase of the barges “allowed Enron to record improperly $12 million in earnings and $28 millionin funds flow for the fourth quarter of 1999 ” (id.); (4) Merrill Lynch “knew that the ‘purchase’ wasnot real” because it had made “an oral handshake side-deal” with Fastow that Enron wouldrepurchase the barges “within six months” and that “Merrill Lynch would receive a rate of returnof approximately 22%.” Id. at 11.532. The indictment makes clear why Fastow and Merrill Lynch engaged in the NigerianBarge transaction: Fastow breached his fiduciary duties to Enron in order to earn year-end bonuses.The phony earnings the transaction generated “enabled the business unit from which the dealemanated [Fastow’s group] to meet its targeted financial goals for the year, which in turn led toincreased unwarranted bonuses to executives in that business unit.” Id. at 10. For its part, Merrill604041v1/007457-175-