Sara,

The financial trader in Sydney should not be entering into master agreements 
for the trades he's doing for ENA-Houston.  The master agreement should be 
executed by ENA in Houston.  If that's not possible, our outside Australian 
tax advisor suggested having an independent agent (such as a lawyer) having a 
power of attorney from ENA and executing the trade (rather than Enron 
Australia).

This means that if ENA has already entered into a master agreement with the 
same counterparty, it would need to enter into a new master agreement with 
that counterparty.  Consequently, with respect to ENA negotiating an 
agreement with the Commonwealth Bank of Australia, Enron Australia will not 
need to execute a separate master for the trades that it is doing on behalf 
of ENA.  In this instance, ENA is considered the principal and Enron 
Australia is just performing services pursuant to the services agreement it 
has with ENA.

Please feel free to give me a call if you would like to discuss this further.

Best regards,
Susan






Sara Shackleton@ECT
05/02/2000 06:48 PM
To: Susan Musch/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: David Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Financial Trading - Enron affiliates

Susan:  I wanted to clarify  whether Enron Australia Pty. Ltd. needs to 
execute ISDA Master Agreements with the SAME counterparties which already 
have agreements with ENA (and vice versa).  As an example, I can only rely 
upon tax advice ENA has previously received in connection with the services 
agreement between ENA and ECT Canada.  For book and tax purposes, the trade 
is recorded on the risk books of the Enron affilate ultimately booking the 
trade but the transaction is actually documented in the name of the Enron 
affiliate having the Master Agreement with the counterpary.  The Enron 
affiliate having the Master Agreement with the counterparty then transacts 
with Risk Management & Trading Corp. (through a bulk swap arrangement).  The 
credit risk remains with Risk Management & Trading Corp. (through an internal 
back to back transaction with the "booking" Enron affiliate)  for which the 
"booking" Enron affiliate will presumably pay a fee pursuant to the services 
agreement.

Consider:  ENA is negotiating an agreement with Commonwealth Bank of 
Australia.  Will Enron Australia require a separate master with Commonwealth 
Bank of Australia?  Or will the services agreement permit the hereinabove 
described arrangement?