FYI.

I'll seek a clariification on what a statutory corporation is.
----- Forwarded by Alan Aronowitz/HOU/ECT on 05/12/2000 10:43 AM -----

	Paul.TYO.Davis@BakerNet.com
	05/12/2000 05:26 AM
		 
		 To: Alan.Aronowitz@enron.com, John.Viverito@enron.com
		 cc: Shinji.Toyohara@BAKERNET.com, Jeremy.Pitts@BAKERNET.com
		 Subject: Enron Online


1. Products

We confirm we do not consider it necessary for Enron to block Japanese users
from dealing any of the products we understand are contemplated.

2. Customers

Regarding the gambling issue, there is no problem in dealings with banks and
insurance and securities companies because of the provisions in the relevant
industry  laws.

With respect to other companies, there is a potential issue, the risk being 
less
with companies of the type Enron has targeted in the First Wave of mailings, 
and
greater if you respond to approaches from individuals or small companies.

We suggest that Enron take a reasonably conservative approach and seek to
minimize the risk by:

- including in the contract representations of the type discussed

- the credit check process being used to exclude individuals, smaller 
companies
and any other organization which appears not to meet the legitimate business
test

- possibly including a risk disclosure statement in the documentation (we have
not had the chance to confirm if it contains one already).

4.  Commodities Exchange Law

Noting that kerosene for example is a product traded on a Japanese commodities
exchange, we reconfirm that we do not see any problem in the online proposal
insofar as it does not use prices quoted on the Japanese market.

From the facility viewpoint, we confirm our view that so long as Enron Japan
does not become actively involved in the business, the proposal will not
constitute a commodities facility in Japan.

5.  Counter party risks

Your credit or other control procedures will need to take account of:

(a) whether the transactions fall into the counter-party's business purposes, 
in
the case of counter-parties other than banks and insurance companies and
securities companies.  In this respect, non-companies and "statutory
corporations" need to be dealt with particularly carefully.  The Japanese 
legal
position is somewhat complicated and we would be happy to advise you further.

(b) the need for proper authorization and execution,  particularly of the
initial application or terms and conditions.

(c)  netting - the situation differs between counterparties who are financial
institutions and those who are not.

(d)  foreign exchange - for non-banks, ex post facto reporting will be 
required,
depending upon the size of the transaction.  This obligation falls upon the
customer, not Enron, and failure to report will not affect the validity of the
transaction, but Enron should consider whether to inform customers of that 
this
need may exist.

6.  Other

We suggest that you/we closely monitor any changes to the role of EJ/EJM or
changes in the structure of the online transactions

We look forward in due course to receiving your instructions to commencing
preparations for the moving of some of the functions onshore.

Regards

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