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

825. These disclosures consistently indicated that Enron's transactions with related parties
were on terms representative of terms that could have been obtained from independent third parties.
This was false. As the Watkins letter stated and the Powers Report concluded these were not arm's-
length transactions of true economic substance or that any independent third party would have agreed
to.
Vinson & Elkins's False and Misleading
"Disclosures" Concerning JEDI/Chewco
826. In Enron's Reports on Form 10-K for the years ended 97 through 00, Vinson & Elkins
approved JEDI's description as an unconsolidated affiliate purportedly only "50 percent" owned by
Enron. In Enron's Report on Form 10-K filed 3/30/00, Vinson & Elkins drafted and approved as
adequate disclosure the following: "At December 31, 1999, JEDI held approximately 12 million
shares of Enron Corp. common stock. The value of the Enron Corp. common stock has been hedged.
In addition, an officer of Enron has invested in the limited partner of JEDI and from time to time acts
as agent on behalf of the limited partner's management." Those "disclosures" were false and
misleading. The existence of Chewco, that Chewco was not independent, was not capitalized with
outside equity at risk but instead was capitalized by JEDI and an Enron guaranty, or that Chewco was
a limited partner of JEDI was never disclosed until Enron announced its massive restatement on
11/8/01. Nor was it disclosed that JEDI transactions were not true commercial, economic
transactions, comparable to transactions with independent third parties. Nor was the substance and
effect of the JEDI transactions on Enron and the Company's financial statements disclosed.
827. In 3/01, Enron paid Kopper and Dodson $35 million in a "purchase" of Chewco's
limited partnership interest in JEDI, so that Kopper could acquire Fastow's interest in the LJM
partnerships. The "disclosure" drafted and approved by Vinson & Elkins concerning the buyout in
Enron's Reports on Form 10-Q filed 5/15/01 and 8/14/01 was false and misleading:
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