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The documents that were drafted to explain the liability
management partnership proposal for purposes of Colgate's
internal review exhibit a scrupulous regard for the need to
justify the proposal by reference to the relative costs of
alternative structures. Petitioner presented expert opinion to
the effect that ACM was a cost-effective vehicle for
accomplishing Colgate's liability management objectives. By
contrast, Pohlschroeder's account of how the decision was made to
invest in the Citicorp Notes reveals a striking indifference to
cost considerations. Petitioner points out, in support of its
position that the consequences of ACM's transactions were not
predetermined, that the partners' exposure to Citicorp's credit
was "real, not theoretical". If the purchase of the Citicorp
Notes confirms that market forces could have affected the
economic outcomes for the partners, it also illustrates how
little market considerations actually affected partnership
decisions. Investing all $205 million of the partners' capital
in Citicorp Notes, most of which would be sold at market price
rather than held until they could be put back to the issuer at
par, did subject the partnership to risk. The Investment
Guidelines reflect the judgment that such risk normally would not
be justifiable. In order to explain the acquisition of the
Citicorp Notes as an interim use for idle cash, preparations to
acquire the Colgate debt were suspended. Over the short period
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