---------------------- Forwarded by Ted Murphy/HOU/ECT on 02/22/2000 04:26 PM 
---------------------------


Steve W Young
02/21/2000 10:45 AM
To: David Port/Corp/Enron@ENRON
cc: David Weekes/LON/ECT@ECT, Tim Poullain-Patterson/LON/ECT@ECT, Robert 
Quick/LON/ECT@ECT, Fernley Dyson/LON/ECT@ECT (bcc: Ted Murphy/HOU/ECT)
Subject: Re: Barcelona  

D Weekes is working with Tim P-P to address the resulting questions and 
should have a briefing memo together for distribution tomorrow.  We will 
follow up to answer Rick's questions at that time.  The major 
issues/questions are still a bit fluid since this just surfaced but  
presently include the following:

Issues/Questions
Exposure - Spread sheets in Liquids and CAS show dramatically different 
exposures of roughly US$ 68 MM (peak, now closer to $ 47 MM) for spreadsheets 
and US$ 13 MM for CAS.  I asked Tim to detail the anticipated exposure in 
coming weeks (ie. timing of cargoes in transit net of anticipated payments to 
be received).
Controls - Delayed mailing of Invoices by up to 30 days in some cases.  
Various other controls issues need to be addressed including where were the 
triggers in the system that should have flagged the issues earlier.
Legal Documentation - Why contract volumes were significantly exceeded and no 
documentation prepared to support trades once the 330k mtpy annual limit was 
breached?  The effect apparently was trades being done without contractual 
support.

Deliverables
Accelerate Feb month end payments (approx. 30 MM).
Disallow deferred payments from Muentes (up to 75 days in some instances) if 
customers are paying more quickly.  Current contract, now effectively 
expired, allows deferral of payments (1/3 each month starting with end of 
month of discharge).
Assign future A/R's directly from third parties on the other side of Muentes.
Create a lock box for future payments to avoid receiving $'s via Muentes.
Execute JV documentation that has now been outstanding for some time.

Goals - in sequential order:  reduce exposure to Muentes, paper 
non-documented transactions already done (ie. beyond volume limits of current 
contract, review mid/back office systems to avoid future problems, improve 
structure via JV or other interim steps if JV execution is still some time 
off.

D Weekes - Get with Ross Koller to make sure no new business is done with 
Muentes (beyond fulfilling new commitments).  Likewise, you or Hardy need to 
get with Tim P-P and R Quick in order to assure all are on the same page and 
agree the best way forward for this relationship.  Based on info. in hand, 
there does not appear to be an issue with Muentes' ability to perform (please 
confirm).  Therefore, care should be taken to maintain the relationship; 
however, I don't see the benefit in doing new deals with Muentes (beyond 
fulfilling current commitments) until the exposure is brought down.  Muentes 
does not appear to justify additional exposure based on my conversation with 
Hardy last week.  So, before the credit limit is reconsidered, the structure 
needs to be improved where payments bypass Muentes (via lockbox or another 
alternative) and A/R's assigned directly to ENE.  The new JV documents may 
take steps to improve the structure; however, this needs to be confirmed as 
it has been some time since the JV docs. have been circulated.  

SY




   
	
	
	From:  David Port @ ENRON                           18/02/2000 19:10
	

To: Steve W Young/LON/ECT@ECT
cc: Ted Murphy/HOU/ECT@ECT 

Subject: Barcelona


Steve I had a brief conversation with Rick today and Barcelona came up. 
My sense is that he is expecting an autopsy that answers how it happened 
(including) how the exposure ran up but didn't get flagged in the right 
places. Is somebody taking care of this ?

D