Background
In the year 2000 the three had been working for Greenwich NatWest, then a unit of NatWest bank, later acquired by Royal Bank of Scotland (RBS). All three were involved in Greenwich NatWest's dealings with Enron Corporation. As a result of these dealings NatWest owned a stake in a Cayman Islands-registered partnership called Swap Sub.
Swap Sub was a special purpose entity created by Andrew Fastow, Enron's CFO, ostensibly for the purpose of hedging Enron's investment in Rhythms NetConnections, an internet service provider. Swap Sub's assets consisted of cash and Enron stock. Its liability was an option giving Enron the ability to require it to buy Enron's entire investment in Rhythms NetConnections at a predetermined price in 2004. In addition to NatWest, Credit Suisse First Boston held an equal stake in Swap Sub. The remainder was owned by a partnership managed by Fastow.
In March 2000, Enron decided to terminate the hedging arrangement with Swap Sub. Fastow managed to persuade Enron to pay Swap Sub a $30 million fee to terminate the option and recover the Enron stock it owned, even though, because of a decline in the price of the Rhythms stock, "Swap Sub owed Enron a ton of money". $10 million of the payment went to Credit Suisse First Boston; Fastow falsely claimed that the other $20 million was going to NatWest, but in fact only $1 million did so. The payment, which was formally agreed on 22 March 2000, resulted in large profits for Swap Sub, enriching several Enron employees who had acquired ownership interests in the partnership.
Read more about this topic: Nat West Three
Famous quotes containing the word background:
“I had many problems in my conduct of the office being contrasted with President Kennedy’s conduct in the office, with my manner of dealing with things and his manner, with my accent and his accent, with my background and his background. He was a great public hero, and anything I did that someone didn’t approve of, they would always feel that President Kennedy wouldn’t have done that.”
—Lyndon Baines Johnson (1908–1973)
“... every experience in life enriches one’s background and should teach valuable lessons.”
—Mary Barnett Gilson (1877–?)
“In the true sense one’s native land, with its background of tradition, early impressions, reminiscences and other things dear to one, is not enough to make sensitive human beings feel at home.”
—Emma Goldman (1869–1940)