- 21 -
advisory services, global investment management and advisory
services, foreign exchange, treasury, and risk management
services, and trust services. ABN Trust Company (ABN Trust), was
an ABN affiliate.
In 1989, Merrill Lynch representatives contacted Johannes
den Baas (den Baas), vice president, Corporate Finance (ABN-New
York), and proposed that ABN enter into general partnerships with
certain U.S. corporations. In an August 7, 1989 memorandum to
Arthur Arnold, executive vice president, Corporate Finance (ABN-
New York), den Baas described the structure of the partnerships
and timing of partnership investments in terms substantially
similar to those set forth in the Zelisko memorandum. Unlike the
Zelisko memorandum, den Baas stated that the partnership was
designed to reduce a U.S. corporation's liability for alternative
minimum tax. The den Baas memorandum includes a discussion of
the financial risks to ABN in pertinent part as follows:
Credit risk: The structure demands that virtually no
credit risk will be taken in the partnership since any
defaults on the principal of the investments will
jeopardize the objective as described hereafter. The
nature of paper invested in will be of the highest
credit quality and will have short term maturities.
* * *
* * * * * * *
Market interest rate risk: ABN New York will take care
of perfect hedges in order to protect the bank from the
changes in the value of the underlying securities * * *
due to interest rate fluctuations. * * *
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011