[Senate Hearing 107-871] [From the U.S. Government Publishing Office] S. Hrg. 107-871 OVERSIGHT OF INVESTMENT BANKS' RESPONSE TO THE LESSONS OF ENRON--VOL. II ======================================================================= HEARING before the PERMANENT SUBCOMMITTEE OF INVESTIGATIONS of the COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED SEVENTH CONGRESS SECOND SESSION __________ DECEMBER 11, 2002 __________ Printed for the use of the Committee on Governmental Affairs U. S. GOVERNMENT PRINTING OFFICE 86-375 WASHINGTON : 2003 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON GOVERNMENTAL AFFAIRS JOSEPH I. LIEBERMAN, Connecticut, Chairman CARL LEVIN, Michigan FRED THOMPSON, Tennessee DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska RICHARD J. DURBIN, Illinois SUSAN M. COLLINS, Maine ROBERT G. TORRICELLI, New Jersey GEORGE V. VOINOVICH, Ohio MAX CLELAND, Georgia THAD COCHRAN, Mississippi THOMAS R. CARPER, Delaware ROBERT F. BENNETT, Utah JEAN CARNAHAN, Missouri JIM BUNNING, Kentucky MARK DAYTON, Minnesota PETER G. FITZGERALD, Illinois Joyce A. Rechtschaffen, Staff Director and Counsel Richard A. Hertling, Minority Staff Director Darla D. Cassell, Chief Clerk ------ PERMANENT SUBCOMMITTEE ON INVESTIGATIONS CARL LEVIN, Michigan, Chairman DANIEL K. AKAKA, Hawaii, SUSAN M. COLLINS, Maine RICHARD J. DURBIN, Illinois TED STEVENS, Alaska ROBERT G. TORRICELLI, New Jersey GEORGE V. VOINOVICH, Ohio MAX CLELAND, Georgia THAD COCHRAN, Mississippi THOMAS R. CARPER, Delaware ROBERT F. BENNETT, Utah JEAN CARNAHAN, Missouri JIM BUNNING, Kentucky MARK DAYTON, Minnesota PETER G. FITZGERALD, Illinois Elise J. Bean, Acting Staff Director and Chief Counsel Robert L. Roach, Counsel and Chief Investigator Kim Corthell, Minority Staff Director Mary D. Robertson, Chief Clerk C O N T E N T S ------ Opening statements: Page Senator Levin................................................ 1 Senator Collins.............................................. 7 Senator Bennett.............................................. 10 WITNESSES Wednesday, December 11, 2002 Charles O. Prince III, Chairman and Chief Executive Officer, Citigroup Global Corporate and Investment Bank, New York, New York........................................................... 12 David C. Bushnell, Managing Director, Global Risk Management, Citigroup/Salomon Smith Barney, New York, New York............. 15 Richard Caplan, Managing Director and Co-Head, Credit Derivatives Group, Salomon Smith Barney North American Credit/Citigroup, New York, New York............................................. 16 William T. Fox III, Managing Director, Global Power and Energy Group, Citibank/Citigroup, New York, New York.................. 16 Michael E. Patterson, Vice Chairman, J.P. Morgan Chase and Company, New York, New York.................................... 44 Robert W. Traband, Vice President, J.P. Morgan Chase and Company, Houston, Texas, accompanied by Eric N. Peiffer, Vice President, J.P. Morgan Chase and Company, New York, New York.............. 46 Andrew T. Feldstein, Managing Director, Co-Head Structured Products and Derivatives Marketing, J.P. Morgan Chase and Company, New York, New York.................................... 49 Muriel Siebert, President and Chair, Muriel Siebert and Company, Inc., New York, New York....................................... 66 Richard Spillenkothen, Director, Division of Banking Supervision and Regulation, The Federal Reserve, Washington, DC............ 71 Douglas W. Roeder, Senior Deputy Comptroller for Large Bank Supervision, Office of the Comptroller of the Currency, Washington, DC................................................. 73 Annette Nazareth, Director, Division of Market Regulation, U.S. Securities and Exchange Commission, Washington, DC............. 75 ................................................................. Alphabetical List of Witnesses Bushnell, David C.: Testimony.................................................... 15 Prepared statement........................................... 101 Caplan, Richard: Testimony.................................................... 16 Prepared statement........................................... 103 Feldstein, Andrew T.: Testimony.................................................... 49 Joint prepared statement..................................... 107 Fox, William T. III: Testimony.................................................... 16 Prepared statement........................................... 104 Nazareth, Annette: Testimony.................................................... 75 Prepared statement........................................... 134 Patterson, Michael E.: Testimony.................................................... 44 Prepared statement........................................... 105 Peiffer, Eric N.: Testimony.................................................... 46 Joint prepared statement..................................... 107 Prince, Charles O. III: Testimony.................................................... 12 Prepared statement........................................... 91 Roeder, Douglas W.: Testimony.................................................... 73 Prepared statement........................................... 123 Siebert, Muriel: Testimony.................................................... 66 Prepared statement........................................... 113 Spillenkothen, Richard: Testimony.................................................... 71 Prepared statement........................................... 117 Traband, Robert W.: Testimony.................................................... 46 Joint prepared statement..................................... 107 APPENDIX Permanent Subcommittee on Investigations Staff Report on ``Fishtail, Bacchus, Sundance, and Slapshot: Four Enron Transactions Funded and Facilitated by U.S. Financial Institutions,'' December 11, 2002.............................. 150 EXHIBITS VOLUME I 301. a. Bacchus, The appearance is a sale, chart prepared by the Permanent Subcommittee on Investigations....................... 185 b. Bacchus, The reality is a loan, chart prepared by the Permanent Subcommittee on Investigations................... 186 302. a. Sundance, The appearance is a joint investment, chart prepared by the Permanent Subcommittee on Investigations....... 187 b. Sundance, [The appearance is a joint investment,] The reality is a sham investment by Citigroup, chart prepared by the Permanent Subcommittee on Investigations............ 188 c. Sundance, The agreement included these provisions, chart prepared by the Permanent Subcommittee on Investigations... 189 303. a. $1 Billion Cash Flow, June 22, 2001, chart prepared by the Permanent Subcommittee on Investigations................... 190 b. $1 Billion Cash Flow, June 22, 2001, chart prepared by the Permanent Subcommittee on Investigations............... 191 c. Flagstaff-Hansen $1.4 Billion, Share Subscription/ Assumption/Payment Set Off, chart prepared by the Permanent Subcommittee on Investigations............................. 192 d. $1 Billion Cash Flow, June 22, 2001, chart prepared by the Permanent Subcommittee on Investigations............... 193 304. Enron Guarantees Citigroup's ``Equity'' Investment In Bacchus, chart prepared by the Permanent Subcommittee on Investigations................................................. 194 Project Fishtail Transaction: 305. Fishtail deal structure, dated January 21, 2002, prepared by Deloitte & Touche.............................................. 195 306. LJM2 Investment Summary for Fishtail, dated December 20, 2000........................................................... 196 307. Investment Return Summary for Fishtail prepared by LJM2..... 199 308. Benefits to Enron Summary, Deal Name: Ampato (Fishtail), dated December 20, 2000, prepared by LJM2...................... 200 309. Enron's LJM2 Approval Sheet for Fishtail, dated December 18, 2000........................................................... 201 310. Project Fishtail/125 Structure.............................. 205 311. Structuring Summary, Project Grinch, dated December 18, 2000, prepared by Chase........................................ 206 312. Project Grinch LP, summary memorandum prepared by Chase, December 16, 2000.............................................. 208 313. Enron Corporate Development Asset Inventory, Tentative and Preliminary, EIM, updated 11/25/01............................. 211 314. Enron Corp. email, December 2000/January 2001, re: 2000 Accomplishments, attaching document, Mike Patrick 2000 Accomplishments................................................ 212 315. Chase fee letter to Enron Corp. signed by both parties, December 20, 2000, re: Fishtail (. . . an advisory fee in an amount equal to $500,000. . . .)............................... 214 Project Bacchus Transaction: 316. Project Bacchus, deal structure chart prepared by Enron Corp 216 317. Transaction Descriptions: Project Bacchus, Summary and Structure Description, prepared by Enron Corp.................. 217 318. Global Loans Approval Memorandum, December 6, 2000, prepared by Citibank, re: Project Bacchus............................... 219 319. Citibank email, April 2001, re: Enron Credit Approval ($200mm--Bacchus: SPV where we have a total return swap from Enron for $180 mm and verbal support for the balance . . .).... 223 320. Executive Summary, including Bacchus/Caymus Trust Facility, prepared by Citibank........................................... 224 321. Project Bacchus, 3% Test and Gain Calculation, prepared by Enron Corp..................................................... 225 322. a. Citibank email, November 2000, re: Enron update (Enron's motivation in the deal now appears to be writing up the asset in question from a basis of about $100MM to as high as $250MM, thereby creating earnings.).................................... 226 b. Citibank email, November 2000, re: Enron update (. . . but it will be major appropriateness issue as will the first two)................................................. 228 c. Citibank email, November 2000, re: Enron/Bacchus Summary (They [Enron] have offered to have the CFO discuss this at whatever level of our [Citibank] organization we think necessary to obtain the right comfort)..................... 229 d. Citibank email, December 2000, re: ENE/Bacchus Update (It is possible, but not certain, that there will be an earnings impact. . . .).................................... 232 e. Citibank email, December 2000, re: ENE/Bacchus (There are ``technical'' issues with NetWorks which MAY make Bacchus unworkable. . . .)......................................... 233 f. Citibank email, December 2000, re: Enron ([H]owever, the $200 million represents 16.3% and 22.4% of operating cash flow and net income . . .), attaching estimated Enron figures.................................................... 234 g. Citibank email, December 2000, re: Enron (Based on 1999 numbers would appear that Enron significantly dresses up its balance sheet for year end; . . .)..................... 237 h. Citibank email, December 2000, re: Enron/Bacchus (The equity component has been approved on the basis of verbal support verified by Enron CFO, Andy Fastow.)............... 239 i. Citibank email, December 2000, re: Enron/Bacchus (Sounds like we made a lot of exceptions to our standard policies. . . .)..................................................... 242 j. Citibank email, May 2001, re: Bacchus Unwind (. . . sufficient for the Trust to prepay the notes in full plus break costs.).............................................. 243 323. Capital Markets Approval Committee, New Project/Complex Transaction Description Guidelines, Enron Corp., Project Bacchus FAS 125 Transaction, 12/11/00 draft, prepared by Citibank....................................................... 244 324. Arthur Andersen LLC Memorandum, December 2000, re: Fishtail LLC Formation/Securitization................................... 246 325. Arthur Andersen email, November 1999, re: Total Return Swaps 250 Project Sundance Transaction: 326. Description of the Sundance Transaction, 10/29/01, prepared by Citibank.................................................... 253 327. Capital Markets Approval Committee (CMAC), Minutes to Meeting, May 16, 2001, Project Sundance (Enron Corp.), prepared by Citibank.................................................... 255 328. a. Chart prepared by Enron Corp., Sundance Steps, Updated May 16, 2001, 5pm.............................................. 257 b. Sundance Steps, Updated May 11, 2001, 5:44 pm............ 259 c. Sundance Steps, Updated June 1, 2001..................... 260 329. Enron Corp. Presentation, Enron Industrial Markets Finance Presentation of Sundance Industrial Partners, June 1, 2001..... 261 330. Enron Corp. Presentation, Enron Industrial Markets--Finance, Presentation of Sundance Industrial Partners to Salomon Smith Barney, NY, August 2001........................................ 264 331. Enron Corp. Presentation, Enron Industrial Markets--Finance, Potential paper mill acquisition presentation to Salomon Smith Barney, September 2001......................................... 271 332. First cut at questions re Sundance, prepared by Citibank.... 280 333. a. Citibank email, April 2001, re: sundance ([T]he argument for why it is debt even if we take a partnership interest that it is more debt like than equity.)............................. 282 b. Citibank email, May 2001, re: Enron Slapshot Structure... 283 c. Citibank email, May 2001, re: Materials for CMAC meeting, attaching copy of Capital Markets Approval Committee, New Project/Complex Transaction Description Guidelines, Enron Corp., Project Sundance Transaction, prepared by Citibank.. 285 d. Citibank email, May 2001, re: cmac memo ([P]erwein wanted to say that this is a funky deal (accounting-wise.))....... 290 e. Citibank email, May 2001, re: sundance (. . . is a structure that insures, insofar as possible, that it will never get drawn.).......................................... 291 f. Citibank email, May 2001, re: sundance (. . . I do not understand why we are proposing to do this transaction.)... 292 g. Citibank email, May 2001, re: Sundance................... 294 h. Citibank email, May 2001, re: Treatment for Project Sundance, includes a handwritten comment that contingent capital commitment cannot be drawn since SBHC will dissolve partnership if draws triggers are being approached.)....... 295 i. Citibank email, May 2001, re: Enron/Sundance (Still an equity investment of sorts (acctg and tax basis for partnership) but is structured in such a way that the 670 bps is guaranteed or we blow the deal. Also our ``invest'' is so subordinated and controlled that it is ``unimaginable'' how our principal is not returned.)....... 296 j. Citibank email, May 2001, re: Sundance/Firm Investment (. . . it does appear that we will need to have approval at some point from Mike Carpenter . . .)...................... 297 k. Citibank (Eleanor Wagner) email, May 2001, re: Project Sundance, including draft memo for Michael Carpenter, expressing Risk Management's Concerns...................... 298 l. Citibank email, May 2001, re: sundance (We do still need Barbara Yastine and Mike Carpenter to approve before we close?).................................................... 300 m. Citibank email, May 2001, re: Sundance (Approval sits in front of Carpenter waiting for signature.)................. 301 n. Citibank email, May 2001, re: Memo on Enron-Project Sundance (We (Bill Fox and I) share Risk's view and if anything, feel more strongly that suitability issues and related risks when coupled with the returns, make it unattractive.), attaching May 2001 Dave Bushnell Memorandum to Mike Carpenter.......................................... 302 o. Citibank email, May 2001, re: sundance ([A]ny word? am getting a significant amount of pressure from enron to execute.).................................................. 305 p. Citibank email, June 2001, re: Sundance Closing.......... 306 q. Citibank email, June 2001, re: Sundance Approvals (No . . . was given a verbal go ahead . . . Understand signed is to follow.)................................................... 307 r. Citibank email, June 2001, re: Sundance (Mike then had a conversation with Dave Bushnell, who shared with us Mike's feedback.)................................................. 308 s. Citibank email, October 2001, re: Sundance Revenues...... 309 t. Citibank email, October 2001, re: sundance redux, attaching Description of the Sundance Transaction.......... 310 u. Citibank email, October 2001, re: Enron Exposure on NA Credit Derivs (Note that these equity partnerships, are designed to act as debt exposure . . .).................... 313 v. Citibank email, October 2001, re: ene transactions (Sundance . . . allows Enron to manage its paper and pulp physical assets and trading business off-balance sheet.)... 315 w. Citibank email, October 2001, re: sundance (According to Enron, our $28.5MM is being held in bank deposits.)........ 316 x. Citibank email, November 2001, re: Sundance Paper (ENE wants to ``discuss'' I have not reiterated the imperative nature of request, did NOT waive the BoD stick. . . .)..... 317 y. Citibank email, November 2001, re: Enron Sundance--the paper trading partnership (Last night we came to terms with Enron for the purchase of our interest in the Sundance partnership.).............................................. 318 334. Citibank/SolomonSmithBarney Interoffice Memo, May 2001, re: Enron Corp.--Project Sundance (Transactions Overview, Description of the Assets, Economics).......................... 319 335. Accounting for Investments in Limited Partnerships and Other Joint Ownership Entities, prepared by Enron Corp............... 324 336. Arthur Andersen email, August 2000, re: 4 to 1 test......... 334 Project Slapshot Transaction: 337. Flagstaff Funding Flows, diagram prepared by Enron Corp..... 347 338. Transaction Summary, Flagstaff/Enron Transaction, prepared by JPMorgan Chase.............................................. 348 339. Slapshot Savings, diagram prepared by Enron Corp............ 354 340. Project Slapshot, Transaction Diagram--@ Closing, June 2001, prepared by Enron Corp......................................... 355 341. Structuring Summary, Flagstaff Capital Corporation, February 2001, (partial) prepared by JPMorgan Chase..................... 356 342. Enron Corp. Stadacona, JPMorgan Chase presentation.......... 362 343. Proposal to Enron Industrial Markets, Structured Canadian Financing Transaction (Project ``Slapshot''), January 11, 2001, JPMorgan Chase presentation.................................... 379 344. Structured Canadian Financing Transaction, Organizational Meeting, February 8, 2001, JPMorgan Chase presentation......... 396 345. Slapshot Transaction Diagram................................ 416 346. Project Slapshot, Transaction Components, June 2001, Enron Corp. presentation............................................. 422 347. J.P. Morgan Securities Inc./Enron Corp. correspondence, June 2001, re: Tax Comfort Letter--Enron Structured Financing....... 426 348. J.P. Morgan Securities Inc./Enron Corp. correspondence, June 2001, re: U.S. Tax Matters--Enron Structured Financing......... 428 349. 206.(f) Agreement between Flagstaff Capital Corporation and Hanson Investments Co., June 2001.............................. 431 350. Credit Agreement between Hansen Investments Co., Flagstaff Capitol Corporation and The Chase Manhattan Bank, June 2001.... 434 351. Project Slapshot, Discussion Session, March 2001, presentation prepared by JPMorgan Chase........................ 514 352. Tax opinion letter from Blake, Cassels & Graydon LLP to Enron Corp., June 2001, re: Canadian Tax Consequences of Proposed Financing............................................. 525 353. Tax opinion letter from Blake, Cassels & Graydon LLP to Chase Securities, Inc., November 2000, re: Canadian Tax Consequences of Proposed Financing............................. 544 354. Tax opinion memorandum from Skadden, Arps, Slate, Meagher & Flom LLP to Enron Wholesale Services, August 2001, re: Project Slapshot....................................................... 565 355. Project Slapshot Structured Financing Fee Letter (Arranger), June 2001...................................................... 593 356. Fee Agreement, between J.P. Morgan Securities Inc. and Compagnie Papiers Stadacona, June 2001......................... 596 357. a. JPMorgan Chase email, February 2001, re: Some Good News (Slapshot) (Bruce and Eric run the Slapshot product.).......... 600 b. JPMorgan Chase email, February 2001, re: Project Slapshot (The lawyers have slammed on the brakes until we confirm that the net accounting for the twist we're contemplating will work.)................................................ 601 c. JPMorgan Chase email, February 2001, re: Slapshot (As discussed, the lawyers (especially the tax lawyers) are hesitant to state explicitly Chase's intention to set-off . . . as they wish to keep the documents as ``arm's length'' as possible . . .)......................................... 607 d. JPMorgan Chase email, May 2001, re: Wed conf call-- discussion points, attaching Enron Discussion Points (May 9, 2001)................................................... 608 e. JPMorgan Chase emails, February and May 2001, re: Project Rio Grande (a.k.a. Flagstaff Capital Corporation)--HEADS UP MEMO (Club Bank Target Hold: $60MM . . )................... 611 f. JPMorgan Chase email, June 2001, re: Flagstaff I.D. #'s (The $1.1 billion will be repaid same day.)................ 613 g. Citibank email, June 2001, re: Additional Daylight Overdraft Request from Enron (Enron will require additional daylight overdraft protection on Friday 6/22/2001 . . .)... 614 h. JPMorgan Chase email, October 2001, re: Flagstaff Syndication Update ([L]ets make sure we lock up Citi and Boa on confidentiality agreements, for what they're worth.) 621 i. JPMorgan Chase email, October 2001, re: Enron Flagstaff (The message from Enron to them is ``you have to do this.'')................................................... 622 j. JPMorgan Chase email, November 2001, re: Enron--Flagstaff (The papers were signed with a $56.25MM target hold to be achieved by 9/30.)......................................... 623 k. Eric Peiffer/JPMorgan Chase email, October 2001, re: enron responsibilities (Eric did an outstanding job and took on serious responsibilities.)......................... 624 358. Bill W. Brown, Accomplishments for the First Half of 2001... 626 359. Doug McDowell resume........................................ 627 360. Project Slapshot brief, Project Slapshot Scores!, prepared by Enron Corp.................................................. 629 361. Sundance Transaction, Slapshot Financing, prepared by Citigroup...................................................... 630 362. Enron Corp. email, December 2000, re: Canadian Financing Proposal (. . . it is a similar version of an arrangement that Morris and I have independently been developing with our Canadian counsel . . .)........................................ 632 363. Enron Corporation Closing Funds Flows for Slapshot, Closing Date: Friday, 6/22/00, Final................................... 633 364. Memorandum prepared by Tim Edgar, Faculty of Law, The University of Western Ontario, to the Permanent Subcommittee on Investigations, December 9, 2002, re: Canadian Income Tax Consequences of Flagstaff/Enron Transaction.................... 638 365. Enron Industrial Markets Finance Presentation of Sundance and Slapshot, March 21, 2001, prepared by Enron Corp........... 646 366. Citicorp/Citibank Credit Approval, Enron Corporation, December 2000, indicating ``verbal guarantees'' of Project Bacchus ``equity'' (see page Bates #CITI-SPSI 0128921)......... 655 367. Accounting Schedules for Projects Fishtail and Sundance, prepared by Enron Corp......................................... 680 368. Letter from Skadden, Arps, Slate, Meagher & Flom LLP (attorneys for Enron Corp.) to the Permanent Subcommittee on Investigations, December 10, 2002, regarding status of the loans, assets, and entities involved in the Slapshot transaction.................................................... 684 369. JPMorgan Chase email, July 1998, attaching copy of Prepay pitch presentation............................................. 687 370. JPMorgan Chase email, March-July 1999, re: Prepaid Forwards and Disguised Loans............................................ 701 VOLUME II 371. Enron Net Works Partners: Valuation Analysis of Contributed Assets, Chase Securities Inc., November 20, 2000............... 1 372. Fishtail LLC, Enron Corp. draft document summarizing Project Fishtail (undated)............................................. 19 373. Amended and Restated Limited Liability Company Agreement of Fishtail LLC, December 19, 2000................................ 22 374. Summary of Project Fishtail, prepared by Deloitte & Touche, LLP, for the Powers Report, dated January 21, 2002............. 74 375. Data Sheet Report, Caymus Trust (c/o Wilmington Trust) as of February 22, 2002.............................................. 102 376. Amended and Restated Limited Partnership Agreement of Sundance Industrial Partners, L.P., June 1, 2001............... 103 377. Citibank email, June 2001, re: Apache Opportunity (Any feedback from Carpenter on Sundance; apparently the deal closed.)....................................................... 175 378. Senior Bank Contacts, document prepared by Enron Corp....... 176 379. Enron status as of November 26, 2001 in terms of directors, officers, stock outstanding, and direct subsidiaries........... 177 380. Enron Corp. Memorandum, October 1, 2000, re: Accounting Enron's Investment in Fishtail LLC............................. 191 381. Additional documents regarding Project Bacchus: a. Enron Corp. Memorandum, December 31, 2000, re: Project Bacchus Transaction Memorandum............................. 196 b. Fishtail Total Costs..................................... 202 c. Citibank email, October 2000, re: Enron/Project Bacchus (Dan sees NO chance that this deal will not go ahead . . .) 203 d. Citibank email, December 2000, re: Bacchus Equity (As you know we are looking for a balance sheet provider for the new Enron trade.).......................................... 204 e. Citibank email, December 2000, re: Enron Bacchus (Citibank GRB have agreed to provide a 9-month facility for the 194 M and also to take the credit risk on the equity portion.).................................................. 205 f. Citibank fax, December 12, 2000, attaching copy with comments of Global Loans Approval Memorandum, December 6, 2000, re: Project Bacchus (from section on page 3 entitled, Enron Corporate Credit Risk: Enron Corp. will essentially support the entire facility, whether through a guaranty or verbal support.)........................................... 206 g. Citibank email, December 2000, re: Enron follow-up (Having this source of liquidity during this nanosecond is important in providing certain legal opinions . . .)....... 211 h. Citibank email, December 2000, re: Enron/Bacchus (. . . the RAP treatment should be that the Banking Book will view the Certificates as if it made a loan in the face amount of the Certificates.)......................................... 212 i. Enron Corp. email, January 2001, re: Fishtail in EIM Partners (In talking to Jeff, he does not like the way I was proposing that Fishtail went into EIM Ptrs . . .)...... 213 j. Citibank email, February 2001, re: Bacchus (I had an Enron question regarding the Enron gty provided for Baccus(sp?).).............................................. 214 k. Citibank email, May 2001, re: phone call with bill brown. 215 l. Citibank email, November 2001, re: Enron Exposure (For Bushnell), attaching Enron exposure table.................. 216 382. Additional documents regarding Project Sundance: a. Sundance Earnings (Still Under Negotiation), document prepared by Enron Corp..................................... 218 b. Administrative Agent Fee Calculation, document prepared by Enron Corp.............................................. 219 c. Amended and Restated Sundance Limited Partnership Agreement, June 1, 2001.................................... 220 d. Final Sundance Numbers, document prepared by Enron Corp.. 293 e. Citibank email, May 2001, re: Sundance (Re fleet: we shd approach these guys by saying we are rolling the trs they have on bacchus but also adding to it.).................... 295 f. Citibank email, May 2001, re: Sundance (Thoughts or concerns I had as I read the revised Sundance LP Agreement:)................................................ 296 g. Citibank email, May 2001, re: sundance (. . . I do not understand why we are proposing to do this transaction. . . .), attaching copy of First cut at questions re Sundance... 298 h. Citibank email, May 2001, re: Second Sundance question set, attaching copy of Second Set of Sundance Questions.... 301 i. Citibank email, May 2001, re: Sundance Partnership....... 304 j. Enron email, May 2001, re: Updated Step by Step Sundance structure Chart--03/22/01.................................. 306 k. Enron Corp. Presentation, Enron Industrial Markets Finance Presentation of Sundance Industrial Partners, June 1, 2001.................................................... 311 383. Additional documents regarding Project Slapshot: a. Flagstaff Capital Corporation, $375,000,000, Senior Credit Facility, JPMorgan Confidential Information Memorandum, May 2001....................................... 316 b. Enron Corp. (Morris Clark to Joseph Deffner) email, undated, re: Repatriation of Cash from Enron Canada (It should be noted that repaying the Preferred Shares within the same year as entering into Project Slapshot puts pressure on both of the above factors and, as such, puts the integrity of the transaction at risk.)................. 352 c. Daishowa Acquisition Structure Steps, charts prepared by Enron Corp................................................. 353 d. JPMorgan Chase email, February 2000, re: Slapshot--Frazer Milner Tax Opinion, attaching copy of draft opinion on Re: Canadian Structured Finance Proposal....................... 360 e. Handwritten notes of Enron Corp. re: Project Slapshot.... 379 f. Blake, Cassels & Graydon LLP Memorandum to Enron Corp., January 2001, re: Prepaid Forward Structure................ 387 g. Enron Corp./Blake, Cassels & Graydon LLP email, February 2001, re: Rider, attaching draft recharacterization rider.. 394 h. Project Slapshot, Canadian Tax Advantaged Financing Structure for Project Crane & ECC Operations, March 20, 2001, Enron Corp. presentation............................. 396 i. Enron Corp. email, March 2001, re: Requirements for Right of Offset accounting....................................... 417 j. Enron Corp./Blake, Cassels & Graydon LLP email, March 2001, re: Canadian Guaranty Issue with attached Enron Corp. handwritten notes re: Slapshot............................. 418 k. Blake, Cassels & Graydon LLP Memorandum, March 2001, re: Warrant Arrangement........................................ 420 l. JPMorgan Chase email, March 2001, re: enron.............. 422 m. Flagstaff Capital Corporation (Delaware), Assets and Liabilities, document produced by JPMorgan Chase........... 423 n. Enron Corp./Blake, Cassels & Graydon LLP email, April 2001, re: Comments on drafts of April 12/01, attaching copy of April 2001 Blake, Cassels & Graydon LLP Memorandum...... 424 o. Blake, Cassels & Graydon LLP Draft Memorandum, May 2001, re: Tax Issues............................................. 428 p. Enron Corp./Blake, Cassels & Graydon LLP email, May 2001, re: Tax Benefit Analysis, attaching draft Tax Benefit Analysis................................................... 432 q. Handwritten notes of Enron Corp., May 2001, re: Slapshot. 435 r. Enron Corp. email, May 2001, re: Journal Entries ([H]ere are accounting entries for the slapshot transaction.), attaching copy of Slapshot-Initial Purchase; Slapshot--Year 1-5 Balance Sheet; and Slapshot-Year 5 End Unwind.......... 436 s. Enron Corp. Memorandum, May 2001, re: Project Slapshot-- Step-by-Step Description................................... 440 t. Handwritten notes of Enron Corp., June 2001, re: Slapshot 443 u. Enron Corp./Blake, Cassels & Graydon LLP email, June 2001, re: Blakes Second Set-off Opinion re: Hansen- Flagstaff, attaching Blake, Cassels & Graydon LLP correspondence concerning Project Slapshot................. 449 v. Flagstaff Capital Corporation, Commitment Allocations as of September 24, 2001...................................... 453 w. Blake, Cassels & Graydon LLP invoice for services rendered for the period ended June 21, 2001, re: Project Slapshot................................................... 454 x. Enron Corp. Memorandum, October 2001, re: Campagnie Papiers Stadacona.......................................... 456 y. Vinson & Elkins invoice for services posted through June 27, 2001, re: Project Slapshot-Enron $400,000,000 Structured Financing....................................... 458 z. Project Dasher, Preliminary Tax Disposition Structures To Maintain Project Slapshot, August 31, 2001, prepared by Enron Corp................................................. 459 aa. Enron Corp. email, December 2001, re: Slapshot (. . . doug, pls call me asap since you are the most knowledgeable.)............................................ 463 bb. Handwritten notes of Enron Corp., December 2001, re: Slapshot/CPS restructuring with attached copy of Enron Corp. Memorandum, December 2001, re: Proposed Sale of Stadacona Mill--Restructuring Steps........................ 464 cc. Blake, Cassels & Graydon LLP Memorandum, December 2001, re: Slapshot Restructuring/CPS Sale........................ 468 dd. Enron Corp. facsimile to Jeff McMahon, December 2001, re: Stadacona (Project Slapshot)............................... 481 ee. Blake, Cassels & Graydon LLP Memorandum, January 2002, re: Slapshot Structure, Current Status Issues and Proposed Transactions............................................... 489 ff. JPMorgan Chase email, January 2002, re: Flagstaff Commitment and Fee Letter (Given the sensitivity to the Enron name and this transaction in particular, I would suggest writing this up as an exception.).................. 494 gg. Enron Corp. Memorandum, November 2002, re: Project Slapshot--Quarterly Payments............................... 495 hh. Patton Boggs LLP correspondence, on behalf of JPMorgan Chase, to the Permanent Subcommittee on Investigations, December 2002, re: structuring fees paid to JPMC........... 497 ii. Canadian Financing Strategy, A Presentation to Enron Corp., September 2000, National Australia Group............ 498 jj. Additional Points, JPMorgan Chase document regarding Project Slapshot........................................... 510 kk. Daishowa Acquisition Structure Steps, Enron document regarding Project Slapshot................................. 511 384. Documents regarding Project Crane and Project Boomerang: a. Enron Corp. email, December 2000, re: Project Crane-- Status Updated and Next Steps (I would to inform everyone that yesterday we had a meeting with Jeff Skilling to present Project Crane . . .)............................... 514 b. Enron Corp. email, December 2000, re: Skilling presentation on EIM Pulp and Paper Market Making Strategy.. 515 c. Enron Risk Assessment and Control Deal Approval Sheet, December 2000, re: Project Crane........................... 535 d. Project Crane, Steps to Acquire SAT and DFPL and Post- Acquisition Undertakings, draft of presentation............ 542 e. Project Boomerang, Transaction Overview, prepared by JPMorgan Chase............................................. 548 f. JPMorgan Chase email, November 2000, re: Project Boomerang (I think what we would like to try to do is define fair market value in such a way that it always turns out to be equal to the value at which the SPE purchased the business.)................................................. 551 385. Additional documents relating to FAS 125/140 Transactions: a. FASB Statement No. 125, Enron Corp. presentation......... 553 b. Update on FASB 140, Transfers of Financial Assets & Extinguishment of Liabilities, June 2001, Enron Corp. presentation,.............................................. 571 c. Andersen email, November 1999, re: Total Return Swaps.... 584 d. Enron Corp./Andersen email, September 2001, re: Background of Project Hawaii 125-O......................... 587 e. Enron Corp. Memorandum, December 2001, re: Hawaii Structure Summary.......................................... 590 f. Enron Corp., Pre-Tax Earnings Analysis of SFAS 140's 1998-2001.................................................. 593 g. Enron Corp. email, May 2001, re: Offshore Double Lease Accounting Treatment....................................... 594 386. Documents relating to transactions involving Canadian Imperial Bank of Commerce (CIBC) and Enron Corp., November, 2002........................................................... 598 387. Additional documents regarding Enron Corp. structured finance deals generally: a. Global Finance: Funding Vehicles, May 2000, Enron Corp. presentation............................................... 613 b. Funds Flow Vehicles, Enron Corp. document................ 621 c. Structured Finance Vehicle, August 24, 2001, Enron Corp. presentation............................................... 629 d. Enron Corp., Structured Transactions Group Overview, June 2001....................................................... 652 e. Enron Structured Finance List As of 11/16/2001........... 659 388. Documents regarding Enron Bank Reviews: a. Enron Corp. email, July 2000, re: Bank relationship review..................................................... 686 b. Debt Investor Relationship Review, January 2001, Enron Corp. presentation......................................... 689 389. Documents regarding Enron Asset Valuations: a. Whitewing Presentation, August 14, 2001, prepared by Enron Corp................................................. 741 b. Enron Global Assets and Services, Equity Value Schedule, $(Millions), As of June 2001............................... 753 c. Enron Global Assets & Services, Significant Exposures (InUS$MM's),............................................... 754 390. Additional documents regarding Enron Prepay Transactions: a. Correspondence between Citigroup and the Permanent Subcommittee on Investigations, July 2002-January 2003, regarding Delta Energy Corporation......................... 755 b. Correspondence between JPMorgan Chase and the Permanent Subcommittee on Investigations, July 2002-January 2003, regarding Mahonia, Ltd..................................... 812 c. Summary of Proposed Transaction Approval Process (TAP) Policy Revisions, undated, from the ``H'' drive of the computer of Enron Corp. employee Rick Carson............... 952 d. Proposed Gas Storage Monetization Structure, undated, from the ``H'' drive of the computer of Enron Corp. employee Michael Garberding................................ 953 e. Enron Corp. email, December 2000, re: New Prepay with Chase (In the prior transactions, we have received a prepayment from Mahonia on a forward delivery schedule of fixed volumes.)............................................ 959 f. Enron Corp./JPMorgan Chase email, September 2001, re: Rep Letter for Mahonia, attaching draft Mahonia representation letter..................................................... 960 g. Enron Corp. email, June 2001, re: Sample Swap Co Letter (I am still trying to track down the original ``Delta/ Mahonia'' Letter. Everyone seems to have shredded their files, which is a little disturbing.)...................... 962 h. Enron Corp. email, November 2001, re: Steps for $250mm Swap Assumption............................................ 963 i. Enron Corp. email, September 2001, re: New Confirm....... 967 j. Enron Corp. email, July 2001, re: Citibank/Delta Prepay (. . . the auditors would like to verify that the MMBtus involved in the trade are not inconsistent with normal trades that run through the financial book for gas.)....... 972 k. Enron Corp. email, September 2001, re: Revised Pre Pay docs (This tracks language that is in the Guaranty and does not name Chase.)........................................... 973 l. Enron Corp. email, October 2001, re: Comments on Prepaid Swaps...................................................... 975 m. Enron Corp. email, September 2001, re: Mahonia Confirm.... 990 n. Enron Corp./JPMorgan Chase email, September 2001, re: Mahonia Limited............................................ 998 o. Enron Corp. email, November 2000, re: Sale treatment for Prepayments with subsequent participation to an investor... 1001 p. Enron Corp. email, September 2001, re: Chase Prepay...... 1003 q. Enron Corp. email, November 2000, re: Prepay (Andy, Michael asked me to forward this structure to you in advance of his call.)...................................... 1004 r. Enron Prepaid Oil Swap:.................................. 1005 391. Supplemental questions and answers for the record of Citibank, regarding December 11, 2002, hearing, dated February 27, 2003....................................................... 1006 392. Correspondence from the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, Securities and Exchange Commission, to the Permanent Subcommittee on Investigations, regarding followup to questions posed in the Subcommittee's December 11th hearing and recommendations included in the Subcommittee report entitled Fishtail, Bacchus, Sundance, and Slapshot, Four Enron Transactions Funded and Facilitated by U.S. Financial Institutions................................................... 1008 EXHIBITS (CONTINUED)--VOL. II [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]