[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
____________________________________________________________________________
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                   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



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