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Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 1 of 93

EXHIBIT 3

2375156.1

Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 2 of 93

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC.
& SUBSIDIARIES,






Plaintiff,


v.


THE UNITED STATES,


Defendant.

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No. 06-305 T
Judge Marian Blank Horn

REQUEST FOR INTERNATIONAL JUDICIAL ASSISTANCE PURSUANT TO THE

HAGUE CONVENTION OF 18 MARCH 1970 ON THE TAKING OF EVIDENCE

ABROAD IN CIVIL OR COMMERCIAL MATTERS

1.

Sender:

Requesting Judicial Authority

United States Court of Federal Claims
717 Madison Place, NW
Washington, DC 20005
United States of America

2.

Recipient:

Central Authority of Bavaria
Bayerisches Staatsministerium der Justiz
Justizpalast
Prielmeyerstrasse 7
80335 München, Germany

3.

Person to Whom the Executed Request is to be Returned

David N. Geier
U.S. Department of Justice, Tax Division
555 4th St. NW
JCB Room 7919
Washington DC 20001



Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 3 of 93

IN CONFORMITY WITH ARTICLE 3 OF THE CONVENTION, THE UNDERSIGNED
APPLICANT HAS THE HONOR TO SUBMIT THE FOLLOWING REQUEST:

4.

Requesting Judicial Authority



United States Court of Federal Claims
717 Madison Place, NW
Washington, DC 20005
United States of America

5.

To the Competent Authority of Munich, Bavaria

Amtsgericht München
Justizgebäude Pacellistraße 5
80333 München, Germany

6.

7.

Case Information:
Consolidated Edison Company of New York, Inc. & Subsidiaries v. The United States,
Case No. 06-305 T (U.S. Court of Federal Claims)

Names and Addresses Parties and Their Representatives:
Plaintiff:

Consolidated Edison Company of New York, Inc. & Subsidiaries
(hereinafter collectively “Con Ed”)

Represented by:

Thomas C. Durham
Nicole Bielawski
MAYER, BROWN, ROWE & MAW
LLP 71 South Wacker Dr.
Chicago, IL 60606

Defendant:

The United States of America

Represented by:

David Geier
Attorney of Record
U.S. Department of Justice, Tax Division
555 4th St. NW
JCB Room 7919
Washington, DC 20001
202-616-3448

2



Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 4 of 93












Eileen J. O’Connor

Assistant Attorney General
David Gustafson


Chief, Court of Federal Claims Section

Steven I. Frahm
Assistant Chief, Court of Federal Claims Section

Trial Attorney

Joseph A. Sergi

James E. Weaver
Trial Attorney
Adam R. Smart
Trial Attorney

U.S. Department of Justice, Tax Division

8.

Nature and Purpose of Proceedings and Summary of Facts

There is currently pending in the United States Court of Federal Claims a suit captioned

Consolidated Edison Company of New York, Inc. & Subsidiaries v. United States, No. 06-305 T,

in which the plaintiff, “Con Ed,” seeks a refund of federal income taxes paid to the United States.

The fundamental issue in a tax refund suit is whether the taxpayer can establish that it has overpaid

its taxes for the periods in suit. See Lewis v. Reynolds, 284 U.S. 281 (1932); Dysart v. United States,

169 Ct. Cl. 276, 340 F.2d 624 (1965). In this case, plaintiff participated in a lease-in/lease-out

("LILO") transaction involving a power station (the “RoCa3” facility owned by South Holland

Electric (N.V. Electriciteitsbedrifj Zuid-Holland) (hereinafter “EZH”)) located in the Netherlands.

The specific substantive issue raised in this refund suit is whether plaintiff is entitled to deductions

for rent, interest, and transaction costs in connection with the LILO to reduce its 1997 federal

income tax liability.

3



Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 5 of 93

Because the counter-party to the LILO shelter, as well as third party consultants and banks

involved are located in foreign countries, including your country, the United States has requested

the assistance of this Court to obtain discovery from foreign entities in its jurisdiction.

The Transaction

The United States’ position is that Con Ed, a United States taxpayer, through a subsidiary,

purported to lease property from its owner, EZH, under a head lease and simultaneously purported

to lease the property back to EZH under a sublease. As is typical in a LILO transaction, the counter-

party, EZH, is a foreign entity that pays no taxes in the United States. EZH is unable to claim

federal income tax benefits, like depreciation, associated with its ownership of the RoCa3 facility.

Immediately after the transaction was entered into, and continuing to date, EZH or its successors

(including E.On Benelux Generation N.V., a subsidiary of E.On Energie A.G.) have continued to

operate the facility and have retained all of the benefits and burdens associated with its use and

ownership. For its part, Con Ed claimed rent and interest deductions associated with the purported

head lease.

According to the LILO documents provided to the United States by Con Ed, the United

States contends that (1) a foreign bank, Hollandsche Bank-Unie N.V. (“HBU”) purported to make

a non-recourse loan to Con Ed to finance the head lease payments, (2) EZH’s sublease rent payments

are essentially identical in timing and amount to Con Ed’s loan payments, (3) the loan proceeds were

not paid to EZH but rather were held by ABN AMRO Bank N.V. (“ABN AMRO”), the parent bank

of HBU, and used to satisfy the identical owner rent payments from EZH and Con Ed’s purported

loan repayments to HBU. Further, other financial entities, such as Credit Suisse Financial Products,

Credit Suisse First Boston (collectively “Credit Suisse”), and Bayerische Landesbank A.G., were

4



Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 6 of 93

also involved in the financing aspects of the LILO shelter transaction. The circular financing

arrangement among Con Ed, EZH and the foreign banks virtually ensured that (1) neither Con Ed

nor EZH will need to use their own funds to satisfy their respective obligations under the operative

documents (save for the fees and other costs paid by the taxpayer in connection with the

transaction); and (2) EZH will retain dominion and control over the subject property.

It is the United States’ position that the tax deductions and losses claimed by Con Ed in

connection with the LILO shelter transaction are improper and that Con Ed will not be able to prove

it is entitled to a refund because:













Con Ed did not acquire a genuine leasehold interest in property in 1997 when it
participated in the LILO;

Con Ed did not incur a genuine debt obligation in connection with the LILO;

The LILO tax shelter transaction and components thereof lacked economic substance
and/or constitute a sham;

The tax deductions fail when the step transaction doctrine is applied and the steps
which comprise the tax shelter are collapsed and then viewed as a single transaction;

Con Ed is not entitled to an interest expense deduction with respect to its
"non-recourse loan," because such loan does not result in a use of the loan proceeds
by Con Ed nor does it constitute a true forbearance by the lender; and

The LILO shelter here at issue creates, at most, a contingent future leasehold interest
not entitling Con Ed to any present deductions on account thereof.

In short, the United States contends that other than the execution of paper and the payment of fees,

nothing happens.

5



Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 7 of 93

The United States has requested information about this LILO transaction from Con Ed

directly. Con Ed has represented that information about the LILO transaction is held by third

parties involved in the LILO transaction, some of whom are identified in this Letter of Request.

The information being sought goes to the substance and operation of the LILO transaction at

issue in the instant case, including, among other things, the financing arrangement, the counter-

party’s treatment of the transaction, and any due diligence performed in anticipation of the

transaction.

This Court considers that it is necessary in the interest of justice that documentary

evidence be obtained for use at trial in this case from several of the LILO transaction participants

or their successors in interest, namely E.On Energie A.G. and Bayerische Landesbank A.G.

9.

Evidence to Be Obtained or Other Judicial Act to Be Performed

a.

E.On Energie A.G.

This Court respectfully requests that E.On Energie A.G., the parent company of E.On

Benelux Generation N.V. (successor in interest to EZH), whose business address is Brienner Str. 40,

80333 Munich, Germany, be requested to produce the documents identified in Exhibit A attached

hereto, copies of which should be provided to the attorneys for the parties to this litigation.

b.

Bayerische Landesbank A.G.

This Court respectfully requests that Bayerische Landesbank A.G., whose business address

is Brienner Str. 18, 80333 Munich, Germany, be requested to produce the documents identified in

Exhibit B attached hereto, copies of which should be provided to the attorneys for the parties to this

litigation.

6



Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 8 of 93

10. Procedural Requests

This Court respectfully requests that counsel for plaintiff and defendant identified above be

notified of the time and place of the execution of the Request, and that attendance by representatives

of the parties be permitted at such execution. In the event that the evidence sought cannot be taken

in the manner requested, it is to be taken in the manner as provided by local law.

11.

Reimbursement

The United States is prepared to reimburse your Court for all costs incurred in executing the

instant request.

The courts of the United States are authorized by law to extend similar assistance to the

tribunals of Germany and will gladly reciprocate the courtesies shown by the courts of Germany.

The Court extends to the judicial authorities of Germany the assurances of its highest considerations.

____________________________________
MARIAN BLANK HORN
Judge United States Court of Federal Claims

Dated: __________________________

SEAL

________________________________

7



Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 9 of 93

EXHIBIT A

2375189.1

Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 10 of 93

EXHIBIT A

DOCUMENTS TO BE PRODUCED BY E.ON ENERGIE A.G.

DEFINITIONS & INSTRUCTIONS

A.

“Document,” “record” and “material” include any written, printed, typed, electronic
or graphic matter of any kind or nature. Any draft or non-identical copy constitutes a separate
document for purposes of these requests. The terms shall be construed to include, but shall not be
limited to, correspondence, electronic mail, notes, notations, contracts, brochures, agreements,
deeds, leases, letters, memoranda, checks, bank statements, reports, analyses, projections, studies,
records, corporate minutes, financial statements, financial records, accounting or audit workpapers
(including permanent workpapers), spreadsheets, transcripts, recordings, and all other types of
written or documentary materials.

B.

Any copy of a document that varies in any way from the original or from any other
copy of the document, whether by reason of handwritten or other notation or any omission, shall
constitute a separate document and must be produced. Each document is to be produced in its
entirety, without abbreviation or expurgation, and the person who made the notation identified.

C.

If any documents are withheld under a claim of privilege, furnish a list identifying
each document for which a privilege is claimed, together with the following information and
sufficient details so as to permit a court to adjudicate the validity of the claim of privilege: date,
sender, recipient, type (e.g., letter, memorandum, telegram, chart, photograph, etc.), subject matter
of the document, the basis on which a privilege is claimed, and the paragraph or paragraphs of this
request to which the document responds.

D.

If any document that would have been responsive to these requests no longer exists,
please state the following for each document: the date of destruction, the reason for destruction, and
the person(s) responsible for the decision to destroy the document(s) and for the actual destruction
of the documents.

E.

Responses to these requests should be made in a manner consistent with Fed. R. Evid.

902(12), Certified Foreign Records of Regularly Conducted Activity.

F.

The term “Con Ed” shall refer to Consolidated Edison Company of New York, Inc.
& Subsidiaries, and affiliated companies, including, but not limited to, Consolidated Edison
Development, Inc., Consolidated Edison Leasing, Inc., and Consolidated Edison, Inc.

Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 11 of 93

G.

The term “Banc One” shall refer to Banc One Leasing Corp. its related affiliates,
subsidiaries, successors, and assigns, including, but not limited to, and any person, officer, director,
accountant, lawyer, agent, or entity acting on behalf of any of the foregoing organizations.

H.

The term “EZH” shall refer to N.V. Electriciteitsbedrifj Zuid-Holland, its related
affiliates, subsidiaries, successors, and assigns, including, but not limited to, Preussen Elektra A.G.
and E.ON Benelux Generation N.V., and any person, officer, director, accountant, lawyer, agent,
or entity acting on behalf of any of the foregoing organizations.

I.

The term “E.On Energie” shall refer to E.On Energie A.G., its related affiliates,
subsidiaries, successors, predecessors and assigns, and any person, officer, director, accountant,
lawyer, agent, or entity acting on behalf of any of the foregoing organizations.

J.

The term “RoCa3” shall refer to the gas fired CHP facility located in the Netherlands
on the border between Rotterdam and Capelle aan den IJessel, constituting the third unit alongside
two previously built units, which was owned by EZH on or about December 15, 1997.

K.

The term “HBU” shall refer to Hollandsche Bank-Unie N.V., its related affiliates,
subsidiaries, successors, and assigns, and any person, officer, director, accountant, lawyer, agent,
or entity acting on behalf of any of the foregoing organizations.

L.

The term “ABN AMRO” shall refer to ABN AMRO Bank N.V., its related affiliates,
subsidiaries, successors, and assigns, and any person, officer, director, accountant, lawyer, agent,
or entity acting on behalf of any of the foregoing organizations.

M.

The term “Tauw” shall refer to Tauw Milieu B.V., its related affiliates, subsidiaries,
successors, and assigns, including, but not limited to, Tauw B.V., and any person, officer, director,
accountant, lawyer, agent, or entity acting on behalf of any of the foregoing organizations.

N.

The term “Credit Suisse” shall refer to Credit Suisse Financial Products, Credit Suisse
First Boston, their related affiliates, subsidiaries, successors, and assigns, and any person, officer,
director, accountant, lawyer, agent, or entity acting on behalf of any of the foregoing organizations.

O.

The term “ABB Leasing” shall refer to ABB Leasing GmbH, Asia Brown Boveri
A.G. & Co. Leasing KG, Asia Brown Boveri A.G., or any other related affiliates, subsidiaries,
successors, and assigns, and any person, officer, director, accountant, lawyer, agent, or entity acting
on behalf of any of the foregoing organizations.

Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 12 of 93

P.


The term “Lease Transaction” shall refer to the series of transactions entered into on
December 15, 1997 between EZH and Con Ed, through a trust, wherein EZH purportedly leased an
approximately 47.468% undivided interest in the RoCa3 facility to Con Ed for 44 years, and Con
Ed then purported to immediately sublease that same 47.468% interest in the RoCa3 facility back
to EZH for a period of 20 years, with various options arising at the end of that 20 year term, as
further described in paragraphs 61-77, inclusive of the complaint attached hereto as Exhibit A-1.

Q.

The term “Lease Transaction Participants” refers to the following entities: ABN
AMRO Bank N.V.; Hollandsche Bank-Unie N.V.; EZH; Con Ed; Credit Suisse; Bayerische
Landesbank; and Wilmington Trust Co.; ABB Leasing and any and all affiliated businesses,
successors, assigns, predecessor or successor businesses, and any person, officer, director,
accountant, lawyer, agent, or entity acting on behalf of any of the foregoing organizations.

R.

The term “Capstar” refers to Capstar Partners L.L.C., its related affiliates,
subsidiaries, successors, and assigns, and any person, officer, director, member, accountant, lawyer,
agent, or entity acting on behalf of any of the foregoing organizations.

S.

The term “Cornerstone” refers to Cornerstone Financial Advisors L.P., its related
affiliates, subsidiaries, successors, and assigns, and any person, officer, partner, accountant, lawyer,
agent, or entity acting on behalf of any of the foregoing organizations.

DOCUMENTS TO BE PRODUCED

THE LEASE TRANSACTION

1.

The drafts located in your files of the documents identified as “Operative Documents
and Certain Other Basic Documents” on pages three through six (US08961-08964) of the document
entitled “Closing Memorandum” (US08959-US08972), a copy of which is attached hereto as Exhibit
A-2.

2.

The documents, including memoranda, notes, emails, correspondence, located in your
files referring to the rent obligation and option prices for the Lease Transaction, specifically
including those documents in your files evidencing how the rent obligation and option prices were
negotiated, calculated and allocated.

3.

was selected.

Exhibit A

The documents in your files discussing how each participant to the Lease Transaction

3

Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 13 of 93

4.

The documents in your files referring to the bids or proposals submitted by the
participants or entities desiring to participate in the Lease Transaction or a substantially similar type
of lease transaction involving the RoCa3 facility, whether or not such bids or proposals were
accepted by EZH.

5.

The documents, including memoranda, notes, emails, correspondence, in your files

referring to the Tax Indemnity Agreement, attached hereto as Exhibit A-3.

OUTSIDE ADVISORS


6.

The documents in your file that discuss or refer to Capstar’s involvement in the
inception, promotion, recommendation, marketing, planning, approval or implementation of the
Lease Transaction.

7.

The correspondence and communication between EZH and Capstar in your file

discussing the inception, promotion, recommendation, marketing, planning, approval or
implementation of the Lease Transaction.

8.

The documents in your files that discuss or refer to Cornerstone’s role in the
inception, promotion, recommendation, planning, approval or implementation of the Lease
Transaction.

9.

The correspondence and communication between EZH and Cornerstone in your

files discussing the inception, promotion, recommendation, planning, approval or
implementation of the Lease Transaction.

10.

The correspondence and communication between Capstar and Cornerstone in

your files discussing the inception, promotion, recommendation, planning, approval or
implementation of the Lease Transaction.

11.

The correspondence and communication between EZH and advisors retained by

EZH, other than Capstar or Cornerstone, in your files discussing the Lease Transaction.

12.

The correspondence and communications in your files between E.On Energie

A.G., E.On Benelux B.V., or Preussen Elektra AG and Capstar that occurred subsequent to the
closing of the Lease Transaction and discussing the Lease Transaction.

Exhibit A

4

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13.

The correspondence and communications in your files between E.On Energie

A.G., E.On Benelux B.V., or Preussen Elektra AG and Cornerstone that occurred subsequent to
the closing of the Lease Transaction and discussing the Lease Transaction.

14.

The correspondence and communication between EZH or its representatives and

advisors and Banc One in your files that discuss the lease transaction involving the the
remaining interest in the RoCa3 facility not involved in the Lease Transaction.

15.

The documents in your files pertaining to the “advisory services” provided to
EZH by ABB Leasing that served as the basis for the invoice attached hereto as Exhibit A-4.

16.

The correspondence and communications between EZH and ABB Leasing in your

file that pertain to the Lease Transaction or the “US-Lease” referred to in the invoice attached
hereto as Exhibit A-4.

17.

The documents in your files pertaining to the lease or other financing arrangement
involving the RoCa3 facility and/or equipment located at the facility in which ABB Leasing is or
was a participant prior to the closing of the Lease Transaction.

18.

The correspondence and communication between EZH and ABB Leasing in your

files pertaining to any lease or financing arrangement discussed in paragraph 17.

19.

The correspondence and communication between E.On Energie A.G., Preussen
Elektra AG, E.On Benelux B.V., EZH or their representatives and any of the Lease Transaction
Participants during the period leading up to the acquisition of EZH by Preussen Elektra AG (the
“Preussen Elektra/EZH acquisition”) which pertain to the Lease Transaction or the effect of the
Preussen Elektra/EZH acquisition on the Lease Transaction.

20.

The correspondence and communication between E.On Energie A.G., Preussen
Elektra AG, E.On Benelux B.V., EZH or their representatives and any of the Lease Transaction
Participants subsequent to the Preussen Elektra/EZH acquisition which pertain to the Lease
Transaction or the effect of the Preussen Elektra/EZH acquisition on the Lease Transaction.

RISK/BENEFIT ANALYSIS OF THE TRANSACTION

21.

The documents in your files containing or discussing the analysis or calculations
performed by or on behalf of EZH regarding the Lease Purchase Option and Sublease Purchase
Option as identified in Section 25 of the “Lease Agreement” (US09324-09352) and Section 19

Exhibit A

5

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of the “Sublease Agreement” (US09385-09440) respectively, copies of which are attached hereto
as Exhibit A-5 and A-6 respectively.

22.

The documents in your files discussing the likelihood that EZH would exercise

the Sublease Purchase Option.


23.

The documents in your files discussing or analyzing the risks faced by EZH with

respect to the Lease Transaction.

24.

The documents in your files discussing or analyzing the steps that could be or

were taken to reduce or mitigate the risks to EZH with respect to the Lease Transaction.

25.

The documents in your files discussing or analyzing the risks faced by the Lease

Transaction Participants other than EZH with respect to the Lease Transaction.

26.

The documents in your files discussing or analyzing the steps that could be or

were taken to reduce or mitigate the risks to the Lease Transaction Participants other than EZH
with respect to the Lease Transaction.


27.

The correspondence, memoranda, opinion letters, or other communications from
or to representatives of Shearman & Sterling; Loeff Clays & Verbeke; Clifford Chance; Davis,
Polk & Wardell; Nauta Dutilh; Loyens & Volkmaars; White & Case; Morris, James, Hitchens &
Williams; or Oppenhoff & Radler in your file which discuss the Lease Transaction.

PRESENTATIONS

28.

The documents in your files which were used in or refer to any presentations
regarding the Lease Transaction or a similar type of transaction involving the RoCa3 facility
made to EZH by Capstar or Cornerstone.

29.

The documents in your files which were used in or refer to any presentations

regarding the Lease Transaction made to Con Ed or representatives of Con Ed by representatives
of EZH, Cornerstone, or Capstar.

30.

The documents in your files used in or referring to presentations like that

identified above in paragraph number 26, made to any other entities or individuals besides Con
Ed or their representatives during the time prior to December 15, 1997.

Exhibit A

6

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DUE DILIGENCE

31.

The studies, analyses, forecasts, projections or other due diligence documents in

your files prepared in connection with the Lease Transaction.

32.

The documents in your files discussing the studies, analyses, forecasts,
projections or other due diligence prepared in connection with the Lease Transaction.

33.

The communication or correspondence between any representative of EZH and

Deloitte & Touche Valuation Group in your files that pertains to the appraisal performed by
Deloitte & Touche in connection with the Lease Transaction.

34.

The documents in your files containing or discussing the appraisal performed by

Deloitte & Touche Valuation Group in connection with the Lease Transaction.

35.

The communication or correspondence between any representative of EZH and
Duke Engineering & Service in your files that pertain to the analysis and investigation of the
RoCa3 facility performed by Duke Engineering & Service.

36.

The documents in your files containing or referring to the analysis and
investigation performed by Duke Engineering & Service in connection with the Lease
Transaction.

37.

The communication or correspondence between representatives of EZH and Tauw

in your files that pertain to the analysis, investigation and assessment of the RoCa3 facility
performed in connection with the Lease Transaction.

38.

The documents in your files containing or referring to the analysis, investigation,

and assessment performed by Tauw in connection with the Lease Transaction.

FINANCING OF THE LEASE TRANSACTION

39.

The communications, correspondence, memoranda, and opinion letters in your
files to or from Credit Suisse in your files that pertain to market rates for loans and/or depositis
made in connection with the Lease Transaction.

Exhibit A

7

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40.

The communications, correspondence, and memoranda between EZH and ABN
AMRO in your files that discuss or pertain to the Lease Transaction, specifically including the
financing of the Lease Transaction.

41.

The communications, correspondence, and memoranda between EZH and HBU in
your files that pertain to the Lease Transaction, specifically including the financing of the Lease
Transaction.

42.

The communications, correspondence, and memoranda between EZH and

Bayerische Landesbank in your files that pertain to the Lease Transaction, specifically including
the financing and/or use of letters of credit, including Irrevocable Standby Letter of Credit No.
151221116, in connection with the Lease Transaction.

43.

The documents in your files pertaining to or discussing Account Number
50.22.51.093 “HBU Assignment Account EZH 1997 Roca 3 Trust 2” at ABN AMRO.

44.

The documents in your files pertaining to or discussing Account Number 43510-0

“EZH 1997 ROCA Facility Trust No. 2” at the Wilmington Trust Company.

45.

The documents in your files pertaining to or discussing the other bank accounts
used in connection with the Lease Transaction other than those identified in paragraphs 43 and
44 above.

46.

The documents in your files pertaining to the purchase of US treasury strip

coupons CUSIP 912833JX9, CUSIP 912833KN9, CUSIP 912833KQ2, CUSIP 912833KRO,
CUSIP 912833KS8, and CUSIP 912833KT6, discussed in the documents identified as Bates
Nos. US01835, US01836, and US01837-US01840, attached hereto as Exhibits A-7, A-8 and A-9
respectively.

47.

The documents in your files discussing the payment of Credit Suisse with funds

from Account No. 43510-0 held at Wilmington Trust Company for the purchase of the
aforementioned US treasury strips.

EZH/E.ON ENERGIE’S VIEW OF THE LEASE TRANSACTION

48.

The internal EZH documents in your files discussing the Lease Transaction or the

decision to enter into the Lease Transaction or a transaction substantially similar to the Lease
Transaction involving the RoCa3 facility.

Exhibit A

8

Case 1:06-cv-00305-MBH Document 23-8 Filed 04/05/2007 Page 18 of 93

49.

The documents in your files evidencing how EZH formerly treated and currently
treats, describes, or lists the Lease Transaction for the purposes of its accounting and financial
reporting obligations.

50.

The documents in your files evidencing how E.On Energie AG or E.On Benelux

B.V. treats, describes, or lists the Lease Transaction for the purposes of its accounting and
financial reporting obligations.

51.

The documents in your files discussing how the Lease Transaction was treated for

the purposes of the Preussen Elektra/EZH acquisition.

52.

The correspondence and communications between representatives of EZH, Con

Ed, Preussen Elektra AG and/or E.On Energie AG in your files which pertain to the arrangement
between Con Ed and EZH.

53.

The documents in your files discussing, for the purposes of the Preussen

Elektra/EZH acquisition, the Lease Transaction’s impact on the RoCa3 facility.

54.

The documents in your files discussing, for the purposes of the Preussen

Elektra/EZH acquisition, the Sublease Purchase Option.

55.

The documents in your files discussing, for the purposes of the Preussen

Elektra/EZH acquisition, the Tax Indemnity Agreement.

56.

The correspondence between representatives of EZH, Preussen Elektra AG, E.On

Benelux B.V., or E.On Energie and representatives of Con Ed in your files which occurred
subsequent to the Preussen Elektra/EZH acquisition and which discuss the Lease Transaction.

57.

The documents in your files containing or referring to the analyses performed for
or on behalf of EZH, Preussen Elektra AG, E.On Benelux N.V., or E.On Energie with respect to
the treatment of the Lease Transaction and/or the RoCa3 facility for the purposes of the Preussen
Elektra/EZH acquisition.

58.

The closing documents and schedules from the Preussen Elektra/EZH acquisition

in your files that refer to the Lease Transaction or Con Ed.

Exhibit A

9

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59.

The documents in your files reflecting or referring to the due diligence performed
by or on behalf of Preussen Elektra AG, E.On Benelux B.V., or E.On Energie assessing the risks
and/or benefits of the Lease Transaction.

60.

The documents in your files reflecting or referring to the valuation of the RoCa3

facility for the purposes of the Preussen Elektra/EZH acquisition.

MAINTENANCE AND OPERATION OF THE FACILITY

61.

Th documents in your files evidencing any involvement by Con Ed in the RoCa3

facility from December 15, 1997 until the present, including, but not limited to, funding,
operating or managing the RoCa3 facility or auditing, reviewing, advising EZH, E.On Benelux
B.V., or E.On Energie, or consulting with EZH, E.On Benelux B.V., or E.On Energie pertaining
to the operation of the RoCa3 facility.

62.

The documents in your files discussing Con Ed’s role in any major capital

improvements to the RoCa3 facility.

63.

The documents in your files discussing Con Ed’s role in any maintenance or

repairs to the RoCa3 facility since December 15, 1997.

64.

The documents in your files discussing any contribution by Con Ed to the

operating expenses of the RoCa3 facility from December 15, 1997 to the present.

GOVERNMENTAL APPROVALS

65.

The correspondence and other written communication in your files between

governmental authorities in the Netherlands and EZH, or representatives of EZH, pertaining to
the Lease Transaction or Con Ed’s involvement in the RoCa3 facility prior to the closing date of
the Lease Transaction.

66.

The documents in your files that were provided to any governmental authority in
the Netherlands by EZH or any representative of EZH for the purpose of obtaining approval or
permission to enter into the Lease Transaction.

Exhibit A

10

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67.

The correspondence or other written communication in your files between EZH or

any representative of EZH and any governmental authority in the Netherlands pertaining to the
approvals or permissions necessary to enter into the Lease Transaction.

68.

The documents in your files provided to the Dutch Internal Revenue Service

(“Belastingdienst”) by EZH or any representative of EZH, including but not limited to Loyens &
Volkmaars, for the purpose of determining the appropriate tax treatment of the transaction under
the laws of the Netherlands.

69.

The correspondence or other written communication in your files between EZH or

any representative of EZH, including but not limited to Loyens & Volkmaars, and
Belastingdienst regarding the appropriate tax treatment of the transaction under the laws of the
Netherlands.

Exhibit A

11

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EXHIBIT A-1

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

,

CONSOLIDATED EDISON COMPANY

OF NEW YORK, INC. &
SUBIDIARI,
Plti,

v.

THE UNTED STATE,

Defendant.

)
)
)
)
)
)
)
)
)
)
)
)
)

FILED APR,9 - .

t06- 305 T

,.' No.

COMPLAIN

Plaintiff, Consolidated Edison Company of New York, Inc. & Subsidiares, brings this

action for a refund of federal taxes paid in connection with the Internal Revenue Service's

proposed adjustments to its federal tax return for the taxable year ending December 3 i, 1997.

The adjustments ar related to Plaintiff s investment in an electrc generation facility located

outside Rotteidam, The Netherlands.

In support of its refund claim, Plaintiff alleges as follows:

JUSDICTION AND SUMRY OF ACTON

i. Plaintiff, Consolidated Edison Company of New York, Inc. & Subsidiares ("Con

Edison NY"), brings this refund

action, founded upon the Internal Revenue Code of i 986, for the

recovery of federl income tax paid by Plaintiff for the taxable year ended December 3 i, 1997

("the 1997 taxable yeaf').

2. Defendant is the United States of America.

3. This Court has jurisdiction by reason of 28 U.S.C. §§ 1346(a)(1) and 149I(a)(1)

and 26 U.S.c. § 7422.

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4. On or before September 9, 1998, Con Edison NY fied a timely federal

consolidated income tax return for the 1997 taxable year with the Internal Revenue Service

("IRS") and timely paid income iaiies in the amount of $291 ,003,408.

5. Con Edson NY's name, address, and identification number appearng on the

1997 ta return ar: Consolidated Edison Company of

New Yor, Inc. & Subsidiares; 4 Irving

Place, Room 615-S, New York, New York, 1003; and 13-500340, repectively.

6. During the 1997 taxable year, Con Edson NY, through its subsidiares, made an

investment i~ an electric generation plant in The Netherlands. The plant is generally known as

"RoCa3" and is owned by N.V. Electriciteitsbedrjf Zuid-Holland ("South Holland Electric").

This trnsaction is hereinaftr referrd to as the "RoCa3 Investment."

7. On its 1997 tax return, Con Edison NY reported rental income with respect to the

RoCa3 Investment and deucted rental expense, amortzation of expenses, and interest expense

.

relating to the property and indebtedness incurrd in the RoCa3 Investmnt, for a net loss of

$937,331.

8. The IRS, during a routine audit of Con Edson NY's ta return for the 1997

taxable year, disputed Con Edison NY's tax tratment of the RoCa3 Investment.

9. On or about September 15,2005, the IRS issued a Notice of Prposed Adjustment

to Con Edison NY, proposing additional federal income of $937,331 for the 1997 taxable year

with respect to the RoCa3 Investment.

10. The IRS's proposed adjustments resulted in a tax increase of $328,066, increasing

Con Edison NY's federal income tax liability for the 1997 taxable year from $291.003,408 to

$291,331,474.

2

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i I. On or about November 3, 2005, Con Edison NY paid the proposed tax deficiency

of $328,066 to the IRS.

12. On or about December 2, 2005, Con Edison NY fied a Form I04X (Amended

U.S. Corporation Income Tax Return) with the IRS requesting a refund of errneously paid

federal income taxes for the 1997 taable year in the amount of $328,066. The reueted refund

was solely attributable to Con Edson NY's payment of the proposed ta deficiency referrd to in

paragraphs io and 11 abve. A tre and complete copy of this claim for refund is attached as

ExhibitA.

13. By a notice of disallowance dated March 15, 2005, the IRS disallowed Con

Edison NY's claim for refund. A true and complete copy of this notice of disallowance is

attached as Exhibit B.

14. The IRS's disallowance of Con Edison NY's claim for refund was erroneous.

15. Con Edison NY requests a refund of its overpayment of $328,06 of federal ta

for the i 997 mabIe year, plus interest and allowable costs.

16. No action on the claim for refund attached as Exhibit A has been taken by

Congress or any agency of the United States or in any judicial proceeding, including any in the

Tax Court of the United State.

17. Con Edison NY has timely

fied this Complaint for a refund of federal taxes paid

within two year of the date of the notice of disallowance as required under 26 U.S.C. § 6532(a).

18. Con Edison NY is the sole owner of the claim included in Exhibit A and asserted

herein, and has made no assignment thereof.

3

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