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

statements that Bankers Trust/Deutsche Bank knew were false – Bankers Trust/Deutsche Bank had
helped materially inflate Enron's earnings in those financial statements.
797.6 Each of the fraudulent transactions created by Bankers Trust violated the tax laws for
they were knowingly and purposefully created to artificially inflate Enron's reported financials.
Indeed, each transaction violated the "business purpose" tax rule, which requires all transactions to
have a valid business purpose other than generating tax savings. Despite the need for an
independent "business purpose," each of the transactions devised by Bankers Trust had as its only
business purpose to artificially inflate Enron's reported financial results. Indeed, this purported
"business purpose" was included in the opinion letters documenting the Bankers Trust transactions.
As put by John Buckley, chief tax counsel to the Democratic members of the Committee on Ways
and Means and former chief of staff to the Joint Committee on Taxation: "'All of these transactions
have no real business purpose, unless you believe it's to artificially create income to report to
shareholders.'" Therefore, each transaction violated the securities laws and, because artificial
inflation of financial results cannot reasonably be a valid business purpose under the federal income
tax laws as written by Congress, each transaction violated applicable tax laws.
797.7 Furthermore, the Joint Committee Report found that Bankers Trust clearly knew that
Enron's financial results were artificially inflated by these tax schemes – which is evident from the
way each transaction was structured by Bankers Trust (these transactions are detailed at length
below). In a 2/15/03 article, The Washington Post focused upon the Joint Committee Report's
finding that Deutsche Bank/Bankers Trust acted with scienter in falsifying Enron's reported financial
results through the fraudulent tax transactions. The article, referring to (among others) Bankers
Trust, stated: "Enron's motive in using the tax transactions to boost profits was clearly known by
its bankers ...."
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