---------------------- Forwarded by Michael Burke/Houston/Eott on 04/07/2000 
08:55 AM ---------------------------


Steve Duffy
04/06/2000 10:13 AM
To: Cutty Cunningham/Houston/Eott@Eott, Susan Ralph/Houston/Eott@Eott, 
Michael Burke/Houston/Eott@Eott, Dana Gibbs/Houston/Eott@Eott, David 
Hultsman/Houston/Eott@Eott
cc:  

Subject: People v. Koch Status Report

This is FYI.  I believe we have this matter under control from an EOTT 
standpoinnt.  SWD
---------------------- Forwarded by Steve Duffy/Houston/Eott on 04/06/2000 
10:10 AM ---------------------------


Edward Attanasio
04/03/2000 02:22 PM
To: Steve Duffy/Houston/Eott@Eott
cc: Bob Jacobs/Long_Beach/Eott@Eott 

Subject: People v. Koch Status Report

 Four current EOTT employees were interviewed by Koch counsel last Friday, 
March 31, in Bakersfield re People v. Koch. These interviews were informal, 
in the sense that the witnesses were not under oath, and no verbatum 
transcript of the proceedings was created. 

 Prior to that time, Koch's counsel of record, an LA lawyer from a very small 
firm, did all the investigation himself.  On Friday, he was joined by two 
lawyers from Munger, Tolles and Olson, which is a pretty heavy hitter LA 
litigation firm.  In response to my pre-interview inquiry, they stated that 
they were lawyers for Koch conducting an internal investigation of the 
allegations of this lawsuit.  During this conversation, they also represented 
taht the DA told them that no employees are targets of the DA's 
investigation.  They conceded, however, that this could change if the DA 
changed his mind.

 While this matter is a civil action, its allegations are pretty severe and 
constitute potentially criminal conduct.  Certain former Koch employees, some 
of whom are now employed by EOTT, are accused of running equipment out of 
compliance with air regs, instructing other Koch employees to run equipment 
out of compliance with air regs, altering equipment to cause it to be out of 
compliance, altering company records to cover up violations, and generally 
obstructing State Air Pollution Inspectors in the perfomance of their 
duties.  NONE OF THIS CONDUCT IS ALLEGED TO HAVE OCCURRED ON EOTT'S WATCH. 

 Based on our contract with Koch, we have been cooperating with their 
investigation of the facts underlyng this suit by making witnesses 
available   However, given the potentially criminal nature of allegations, I 
have advised all EOTT personnel during their pre-interviews that, while these 
are just allegations, they are potentially serious, and if they are 
uncomfortable with continuing at any time, they ahould inform me and I will 
stop the interview so they can seek the advice of an independent counsel.  I 
was also prepared to strongly urge any employee who implicated himself in 
potentially criminal misconduct during the pre-interview not to proceed but, 
rather, to get a lawyer to advise him.  Fortunately this did not happen; all 
of our people deny participation in the alleged wrongdong.

 One of our employees said he was present when the former plant manager, who 
does not work for us, told a couple of employees to record false information 
in company records in order to hide events of non-compliance.  Other than 
that, nothing of much interest came up.

 Naturally, this lawsuit has some of our people concerned about their 
reputations and possible exposure.  While it is in EOTT's best interest to 
comply with Koch's requests for information (based on the 12/1/98 contract 
requirements), it might not be in certain individuals' best interest to 
ultimately give testimony in this case without first getting immunity from 
prosecution.  Therefore, if this goes any further (ie. to depostions, etc.) I 
would like to express the concerns of these employees to Koch and inquire as 
to whether Koch will pay for them to get independent counsel to advise them.  
Hopefully, they'll just settle the thing, and we won't have to deal with it 
anymore, but if they don't, I like to try to make sure our guys know their 
rights vis a vis the district attorney.

 Your thoughts? --Ed.