Footnote 8

(a)Sutton Bridge656. The Sutton Bridge FAS 140 transaction was designed to allow Enron to monetize itsequity interest in Sutton Bridge, a gas turbine power plant located in Lincolnshire, England. SuttonBridge’s importance to both Enron and RBS was highlighted by the fact that it was the firststructured equity participation executed by the RBS Structured Finance Division.657. RBS knew the Insiders were using Sutton Bridge to manipulate Enron’s financialstatements. RBS took pride in having “[f]acilitated [Enron’s] ability to realize [$29 million] capitalgain to boost half year earnings,” and identified “[c]ashflow [sic] generation of [$68 million]” asamong the reasons for the transaction. RBS 3126610-RBS 3126611 (quoted in Exam. IV, App. Eat 63).658. RBS knew its equity in the SPE established for the transaction needed to be at riskin order for the Insiders’ desired accounting treatment to be valid. As RBS’s Sutton Bridgetransaction summary noted, the investor “must have a ‘significant’ equity risk, currently acceptedas 3% equity (97% debt),” and there could be “no contractual commitment of the vendor torepurchase the shares.” RBS 3126617 (quoted in Exam. IV, App. E at 65 n.260). However, RBSobtained verbal assurances from the Insiders that negated any real risk in the transaction. An RBSmemorandum referred to the “short-term involved” and “the ‘understanding’ with Enron regardingtheir repurchasing at an agreed return.” RBS 3038535 (quoted in Exam. IV, App. E at 65). RBSreferred to this agreement as “Trust Us.” RBS 3126621 (quoted in Exam. IV, App. E at 65 n.264).RBS would not have entered into Sutton Bridge without this “Trust Us” assurance. See Exam. IV,App. E at 65.659. RBS was fully aware that these verbal assurances thwarted the FAS 140 requirementthat the equity in the SPE be at risk. But RBS also knew that the Insiders needed to account forSutton Bridge as a FAS 140 transaction in order for them to falsely inflate Enron’s cash flow. So,604041v1/007457-226-