Enron Corp. - University of California | Office of The President

Communications Is Running Faster and Momentum Is Building
• The network build is much accelerated from initial conversations we had with
management just three months ago. We believe that Enron is on pace to build, swap
into, or acquire at least 18,000 route miles by year-end 2000. More important, the
network should reach 15 cities by year-end 1999 and 45 cities by year-end 2000.
* * *
• Enron's bandwidth trading business, which focuses on pairing parties that
have excess lit network capacity with parties that have a shortage (or temporary
shortage) of lit network capacity, is developing at a much faster pace than
expected....
There Are Several Implications from the Above Discussion
• ... Enron's efforts in telecom should be considered by investors to have large
potential.... If Enron has proven anything during the past decade, it is that it is the
master of risk management, capturing inefficiencies in volatile and developing
markets by identifying arbitrage opportunities, and being first-to-market at just
about everything it does.
155. Each of the statements made between 10/21/98-7/6/99, were false or misleading when
issued. The true but concealed facts were:
(a) Enron's financial statements and results issued during this period were false
and misleading as they inflated Enron's revenues, earnings, assets, and equity and concealed billions
of dollars of debt that should have been shown on Enron's balance sheet, as described in 418-611.
(b) Contrary to the representations that Enron's transactions with its related parties
were fair to Enron and on terms representative of those that could be obtained in arm's-length
transactions with third parties, in fact, the transactions with Enron's related parties were unfair to
Enron and set up in a manner to permit Enron to pay off key Enron insiders, including Fastow, for
their participation in the scheme, which included arranging the illicit and illegal financial
transactions with those related parties on terms that no independent third party would ever have
agreed to, as detailed herein.
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