Eric Shaw's team has learned that an investigation has been initiated by the 
Turkish military to expose and eliminate corruption in the Turkish energy 
sector.

On January 6, the military took seven energy sector bureaucrats into custody. 
In the following days, other officials from TEA? (the electricity generation 
monopoly) and the Ministry of Energy and Natural Resources (MENR) and 
executives from a number of Turkish companies were also taken into custody. 

While many of the bureaucrats and executives have been released, a leaked 
report from the military investigators suggests that the operation is wide 
ranging and may ultimately target the Minister of Energy and Natural 
Resources and other senior energy sector bureaucrats and businessmen. 

Enron Implications

Trakya - One Turkish newspaper has reported that Enron,s  478 MW Trakya power 
project was being investigated.  This has not been reported anywhere else.  
Because the power price at Trakya has been the target of criticism in the 
past, we are not surprised by this report. Although an investigation is 
always a possibility, other than the one newspaper report, there has been no 
indication, official or otherwise, that an investigation is planned or 
underway.
 
GAMA - It has also been reported that the wife of Gorkhan Yardim, the General 
Manager of BOTA? (the natural gas monopoly), works at GAMA, our Turkish 
partner in the Trakya project, and that his expensive car was a gift from 
GAMA. GAMA has told us, and Yardim has defended himself publicly by saying, 
that his wife has been working at GAMA since 1993, long before Yardim had 
risen to his current position of power at BOTA?, and that the car was not a 
gift from GAMA. It is worth noting, however, that there have been a number of 
newspaper reports questioning GAMA,s role in a controversial gas marketing 
deal being undertaken by their TurRusGas joint venture with Gazprom and BOTA?.

Outlook

It is still not clear how or when this investigation will end. In the medium 
and long term, this will be good news for Enron and other reputable Turkish 
or foreign companies which have found it difficult to do transparent energy 
deals in Turkey in the past. In the short term, however, it is likely to 
result in a marked decrease in meaningful activity in the Turkish energy 
sector, as worried bureaucrats, innocent and guilty, lay low. 

We will continue to monitor developments, especially with regard to the 
Trakya project, and report as necessary.