Bill,
I violently agree with you on this point.  My belief is that we have the opportunity to hire and develop the intellectual capital to be expert in the risk evaluation and syndication side.  If we do not, then I do not think this will happen properly.  In addition to making good decisions and providing good (but not always heeded advice), we need to have the extra firepower and credibility to 'convert the heathens'.  I think that means more and more experienced people and some more structure.  The main point of my e-mail was to summarize that we have already recognized the need and are addressing from our end.  My last paragraph was an allusion to the fact that your concerns about the non-RAC responsibilities will become self-evident as we put a greater spotlight on this business and the teams begin to jell.  Where you and I may disagree is that rather than suggest that we have the situation in hand and will make incremental improvements, we need to at least consider that the window is open and let's jump through.
Thoughts?
Ted

 -----Original Message-----
From: 	Bradford, William S.  
Sent:	12 September 2001 21:34
To:	Buy, Rick; Murphy, Ted
Subject:	FW: International Credit

While I agree with most of your points, I would like to stress that the business units still lack the direction and skills necessary for building an international business.  One of our biggest difficulties has been dealing with originators, logistics managers, and support staff who lack experience in international trade.  To have a centralized international credit function we will need a centralized international support staff.

Trades within high risk countries with limited information is not where we or the market has historically had much risk appetite.  We have continued to focus the commercial teams on risk syndication and have proactively approached banks on different mechanisms for laying off risks where possible.  We need to think about what risk tolerance we are comfortable with accepting to help grow this business.

I agree we have had the foresight to focus on building the necessary skills to support the business growth but have not done a good job of proactively communicating the credit risks inherent in the international businesses.  Both Tom Moran and Ken Curry have decent experience in international trade and l/c's but have not taken a proactive enough approach with the business teams.  I have addressed this issue with both of them in the PRC.  I think John Suttle has done a good job getting up the curve on issues and has taken an active approach on liasing with Sydney banks and hiring the necessary skills sets in Australia.  As Ted noted the hiring of John Collinette has been a big plus for the London team.  Although it is not their day to day responsibility, both Debbie Brackett and David Hardy have more international trade experience than most in the marketplace.

Effectively the International Credit Group is well structured with the credit teams supporting the internatinoal businesses.  Collinette/Ngo/Suttle - Metals
Curry/Rohauer/Maley/Nelson/Suttle - EIM
Moran/Rohauer/Maley/Nelson/Suttle - EGM

This is a very detailed business and I think we have lacked the coordination across offices.  We need to improve communication and continue to develop the necessary depth in our teams to meet the business objectives. 

Let's discuss in the coming weeks.
Bill


 -----Original Message-----
From: 	Murphy, Ted  
Sent:	Tuesday, September 11, 2001 8:13 AM
To:	Buy, Rick
Cc:	Bradford, William S.
Subject:	International Credit

Rick,
While I am not 100% sure of what Greg means by international credit, both Bill and I  have recognized that there is a facet of RAC/Credit function that we are not net long vis-a-vis the direction of the business, particularly the non-energy commodity businesses - steel, metals, paper - as well as the coal business and the crude complex.  What seems to be needed is some people that have experience in structures (good and bad) that support the movement of large packages of physical goods from the 3rd world to the first world.  Knowledge of the subleties of l/c language, insurance products, dog counterparties, typical scams, money launderers, lay ranges, demurrage....To that end, we both interviewed and subsequently hired John Collenette, head of credit for an international trading organization - Trafigura.  John spent 10 years at Paribas and then the last 7 at Trafigura.  He went through 3 full rounds of interviews, primarily with the metals guys and incuding Michael Brown.  My plan was to install him as the 'team lead' in metals allowing him to get 'enronized' with the idea that he would expand his role to include global products and EIM.  I guess I will accelerate this process.
In addition, I have also hired a sr spec with metals experience from Koch.  We have interviewed a few other prospects with transactional credit experience.  We are planning to supplement some of this industry knowledge with Tracy Ngo and a few strong managers with solid credit skills.  The issues we have yet to begin getting traction are how to staff other offices - NY and Sydney principally.  Here we are constrained by current budgets.

Also, I have worked with the operations staff to take away some of the operational credit issues like chasing down information, money laundering checks, calling  for margin, and opening accounts so that we can hire credit professionals to analyze credits and deals.  

Finally, a critical piece of the puzzle is to also strengthen the people and the processes around the logistics of credit - specifically, the logistics function, treasury (l/c issuance/acceptance), and risk management.  It is in the hand-offs of infomation where most of the risk lies, in my opinion.  

When you are here, we ought to make that a topic for discussion.  Not to over-state the need, I think it will require somewhat of an on-going focused effort and coordination between offices and departments similar to the EES style.

Ted