Footnote 8

663. In each of the ETOL I-III transactions, RBS obtained verbal assurances from theInsiders – who included but were not limited to Fastow and Glisan – that its equity investment inthe SPE it established and capitalized would be repaid. Iain Houston, RBS’s Head of StructuredFinance, told his colleagues before ETOL I: “I have no issue doing this type of deal in view of theverbal assurances we have been given consistently by senior Enron staff – most recently by AndyFastow to [senior RBS executives Iain Robertson (“Robertson”), Johnny Cameron] and other [RBS]leading lights.” RBS 6074373 (quoted in Exam. IV, App. E at 68-69). Another RBS executive saidthe verbal assurances in ETOL I “come from a very high level and are unequivocal.” RBS 3121434(quoted in Exam. III, App. E at 70). An RBS executive proclaimed himself “comforted” byFastow’s “assurance that the bank’s remuneration would be met by Enron.” RBS 1113345 (quotedin Exam. IV, App. E at 77). In ETOL I, RBS also entered into a total return swap, which effectivelyguaranteed repayment to RBS of the interest, principal, and other amounts due under RBS’s loanto the SPE in the transaction. See Exam. IV, App. E at 67-68. In ETOL II and III, RBS received“high level assurances” regarding repayment of the equity and yield. See, e.g., RBS 3124934, RBS3124935, RBS 3124939 (quoted in Exam. IV, App. E at 75-76). A later memorandum on ETOL IIIdescribed a “‘promise’ to make us whole on the equity at the end of the transaction.” RBS 1087734(quoted in Exam. IV, App. E at 76 n.304).664. As in Sutton Bridge, RBS knew these verbal assurances had to be unwritten,otherwise the Insiders would not be able to account for ETOL I-III as FAS 140 transactions. TheRBS Credit Application for ETOL I acknowledges the existence of an “informal agreement toensure that we achieve our required return and are made whole on the equity principal at transactionmaturity,” but also candidly states that “their desired accounting treatment does not permit anyformal arrangements to be made.” RBS 3141124 (quoted in Exam. IV, App. E at 68). Another RBSexecutive referred to “verbal undertakings” that “cannot be formally documented for accounting604041v1/007457-228-