Footnote 8

money. Teresa, for example, resulted in a payment in 1997 through 2001 by an Enron subsidiaryof approximately $131 million in federal income taxes which that subsidiary would not have hadto pay absent the transaction.219. Enron and BT/Deutsche Bank entered into two other tax transactions, known asValhalla and Renegade, in order for BT/Deutsche Bank – not Enron – to reduce its tax liability.These were known as “accommodation” transactions – that is, transactions the Insiders agreed toas reward for BT/Deutsche Bank’s creativity. BT/Deutsche Bank compensated Enron for its rolein them.220. Taken together, the effect of the tax transactions was to inflate Enron’s income in itspublic financial statements by significant amounts. Investigators for the Senate Finance Committeeconcluded that by 2001, the BT/Deutsche Bank tax transactions accounted for $446 million of the$651 million attributed to Enron’s tax schemes. Under GAAP, these sums could not be recognizedas income unless Enron would receive real, anticipated tax benefits in future years. That was notthe case. Those transactions were therefore “artificial transactions” with “no bona fide businesspurpose.” And, as the Enron Examiner concluded, the Insiders’ accounting treatment for thesetransactions was inappropriate.221. The Insiders should not have engaged in the tax transactions, nor should they haverecorded income on Enron’s financial statements from the tax transactions. The tax transactions hada material effect on Enron’s financial statements. Eliminating the income they represented wouldhave had a material impact on Enron’s credit rating.e. The scheme gave the Insiders and the Bank Defendants time andopportunity to profit at Enron’s expense.222. From late 1997 until late 2001 a number of the Insiders facilitated these SPEtransactions by establishing and operating three self-interested partnerships: Chewco, LJM1, and604041v1/007457-62-