FYI, the criminal proceeding was settled yesterday w/o the indictment being 
accepted by the judge -- a good result for us.  It's worth noting that Celina 
did an excellent job handling this.

Rgds,
 John

p.s. note that the rulers are plastic, not wood . . .
---------------------- Forwarded by John Novak/SA/Enron on 04/18/2001 12:38 
PM ---------------------------


Celina Ozorio
04/18/2001 11:42 AM
To: Peter E Weidler/NA/Enron@Enron, Laine A 
Powell/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Christiaan 
Huizer/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Peter N 
Anderson/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Celso 
Bernardi/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: John Novak/SA/Enron@Enron, Michelle Blaine/ENRON@enronXgate, Eddy 
Daniels/NA/Enron@Enron 

Subject: Re: Cuiaba 480 MW Power Project - GasMat Criminal Proceeding

The hearing for the GasMat criminal proceeding took place yesterday in 
Cuiab?.  GasMat succeeded in making a settlement with the prosecutor's office 
and the case was dismissed.  The prosecutor has actually apologised for the 
mistake they made in offering the indictment without proposing a previous 
settlement.  For that reason, the judge did not accept the indictment and the 
prosecutor proposed that GasMat renders community services by manufacturing 
2000 plastic rulers with the following encryption:  "Minist,rio P?blico do 
Estado de Mato Grosso - call the Minist,rio P?blico at 65-612-2005 to report 
environmental crimes".  GasMat accepted the penalty and the settlement was 
made (conditioned to the delivery of the rulers in 30 days), the caveat is 
that GasMat will not be able to benefit from Law 9.099/95 (i.e. to settle in 
a new criminal proceeding) for a period of 5 years.   GasMat does not keep 
any criminal record.

Please let me know if anyone needs a copy of the sentence.  Thanks.

Regards,
Celina
---------------------- Forwarded by Celina Ozorio/SA/Enron on 04/18/2001 
10:49 AM ---------------------------


Celina Ozorio
04/09/2001 12:54 PM
To: Laine A Powell/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: John Novak/SA/Enron@Enron, Peter E Weidler/NA/Enron@Enron, Michelle 
Blaine/ENRON@enronXgate, Eddy Daniels/NA/Enron@Enron 

Subject: Re: Cuiaba 480 MW Power Project - GasMat Criminal Proceeding  

Laine:  

The prosecutor's office has presented an indictment against GasMat requesting 
the suspension of the criminal proceeding  if GasMat provides community 
services, i.e. the 2000 rulers.  The suspension of the proceeding implies in 
a probation period of two years during which GasMat cannot be called into any 
other new proceeding.  According to verbal understandings with outside 
counsels, since the violation is a "minor crime",  the prosecutors should 
have  tried a settlement before offering the indictment. One the other hand, 
the judge has not yet "formally" received the indictment.    In that view, 
one of our possible defenses is to try to reverse this situation and propose 
a settlement before the acceptance of the indictment by the judge so that 
GasMat would be free from the 2 years probation period.  However, even if 
GasMat does a settlement it would still face a future limitation in which it 
won't be able to benefit from  Law 9099/95 (Law of Special Judgements) for 
minor violations, but in neither the cases GasMat will be considered a 
"primary convict".  Not to be able to benefit from Law 9099/95 would be a 
problem if the prosecutor's office decides to offer an indictment  based on 
the other two "Autos de Infra??o" issued by IBAMA.  Apparently, the only way 
to be absolutely free for any charge is by presenting the defense on the 
proceeding and proving that the Contractor was, in fact,  the violator.  

I am still awaiting a formal position from the outside counsels as to which 
course of action should be taken.  They are still reviewing the documents and 
the jurisprudence.  As soon as I have their feedback I will inform you.

With respect to a concern that Pete had - why not making a settlement with 
the prosecutor's office before going into Court? -  I need to explain that 
the Criminal Procedural Law prescribes that once the prosecutor's office 
offers the indictment,  the State Court not only has a prerogative but also 
an obligation to carry on with the proceeding.  Even if a settlement is 
possible, it needs to be made in the records of the proceeding and overlooked 
by the judge.

Regards,
Celina



Laine A Powell@ENRON_DEVELOPMENT
04/09/2001 08:10 AM
To: Celina Ozorio/SA/Enron@Enron
cc: John Novak/SA/Enron@Enron, Peter E Weidler/NA/Enron@Enron 
Subject: Cuiaba 480 MW Power Project - GasMat Criminal Proceeding

Celina -

 Pls provide the status of our defense to this criminal proceeding.

rgds

Laine

---------------------- Forwarded by Laine A Powell/ENRON_DEVELOPMENT on 
04/09/2001 10:09 AM ---------------------------


Christiaan Huizer
04/09/2001 12:51 PM
To: bboeh@opic.gov, Frank.Kluesener@kfw.de
cc: Celina Ozorio/SA/Enron@Enron, Laine A 
Powell/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Peter N 
Anderson/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Eddy Daniels@Enron, John 
Novak/SA/Enron@Enron 

Subject: Cuiaba 480 MW Power Project - GasMat Criminal Proceeding

A criminal proceeding has been moved against GasMat.  The criminal proceeding 
seems to be a result from the irregular deforesting at Piraputanga Ridge.  In 
September, 2000, the IBAMA (federal environmental body)  started an 
environmental investigation at two ridges where a directional plataform was 
being built and concluded that the deforested area was greater than the 
licensed.  As a result, IBAMA  installed two administrative proceedings 
"Autos de Infra??o" and, as a consequence, issued a fine for both 
proceedings. Auto n. 085007 relates to Ridge 10 and the description of the 
infraction is: "To destroy native forest, transplanting 20 trees and 
replanting them to prevent from being penalized". Auto n. 085006 relates to 
the "Serra Piraputanga" and the description is "to execute drilling services 
in the Piraputanga Ridge to install the pipeline in area greater than the 
authorized."  The Mato Grosso judge issued a notice determining that GasMat's 
legal representative appears in Court on next April 17, 2000.  

More information will be provided as soon as available.

Regards,

Christiaan