Footnote 8

Id. at B-1 (emphasis added).266. With respect to the transactions involving Enron’s forest products business – Bacchusand Sundance Industrial – the PSI Report found that Citigroupactively aided Enron in executing [the transactions], despite knowing the transactionsutilized deceptive accounting or tax strategies, in return for substantial fees orfavorable consideration in other business dealings. The evidence also indicates thatEnron would not have been able to complete any of these transactions without thedirect support and participation of a major financial institution.U.S. Senate Permanent Subcommittee on Investigations Report on Fishtail, Bacchus, Sundance, andSlapshot, January 2, 2003, at 2 (emphasis added).267. The Enron Examiner reviewed in detail the Citigroup prepays, the three Citigroupminority interest transactions (Nighthawk, Rawhide, and Nahanni), and the two Citigrouptransactions involving Enron’s forest products business (Bacchus and Sundance Industrial). TheCitigroup prepay transactions, the Enron Examiner concluded, were loans disguised to look likecommodity transactions; that “each transaction was circular” and that “[a]ll commodity price riskwas eliminated by having it circle back to Enron”; that “Citigroup understood Enron’s accountingfor the Citigroup Prepays and the inadequacy of the disclosures in Enron’s financial statements”;and that Citigroup materially assisted the Insiders in misstating Enron’s financial condition by,among other things, lending its own funds in five of the prepay transactions, developing the creditlinkednote structure by which Enron raised funds for other of the prepays, providing itsSPE – Delta – to serve as the shell pass-through party in six of the prepays, and serving as the passthroughentity in two prepays where it was not the lender. Exam. III, App. D at 47, 50. As to theNighthawk and Nahanni minority interest transactions, the Enron Examiner concluded that Enron’saccounting treatment did not comply with GAAP; that Citigroup knew Enron’s accounting treatmentdid not comply with GAAP; and that, despite this knowledge, Citigroup facilitated the Insiders’604041v1/007457-79-