Thought you might find the below interesting.

Joe

 -----Original Message-----
From: 	O'Day, Nicholas  
Sent:	Wednesday, October 24, 2001 9:01 AM
To:	Hirl, Joseph
Subject:	FW: Japan research

FYI

 -----Original Message-----
From: 	Johnston, Robert  
Sent:	Monday, October 22, 2001 8:52 PM
To:	O'Day, Nicholas; Crowther, Mark
Cc:	Tholan, Scott
Subject:	Japan research

Nick and Mark-

per our call last week, we now have our sources engaged on the following background and questions:

Essentially, E-Power Japan, an Enron subidiary appears to be embroiled in a potentially serious FCPA situation as a result of actions taken by one of its counter-parties, Taisei Engineering.

The former (as of Sept.17th) CEO of E-Power Japan is named Tetsuro Seguchi.  Seguchi formed an "understanding" with a Japanese company called Taisei Engineering.  The CEO of Taisei Engineering is named Kyuji Takahashi and the General Manager of Taisei is named Koichi Hosokawa.  These individuals were the primary contacts at Taisei for E-Power Japan and Seguchi.  

The nature of the "understanding" between Seguchi and Taisei appears to have been that Taisei would help E-Power get site licenses for constructing generators from local prefecture politicians.  Taisei would then get the operations and maintenance contracts for the E-Power operated generators.  It is not clear that these contracts would automatically go to Taisei, but given the rest of the story and what we know about the Japanese construction industry, these types of anticompetitive practices are hardly unheard of and were probably part of the understanding. 

Our Tokyo office believes that these arrangements were struck by Seguchi without the knowledge of the Enron employees seconded to E-Power Japan. The senior Enron man at E-Power was Kerry Sloan.  Another E-Power local hire, a VP named Kuwubara, may also have been involved.

Enron Japan first became aware of the Taisei problem when the new leadership of E-Power met with a local politician in Aumori Prefecture who had been helping E-Power Japan.  The politician mentioned casually that he "had not been paid for a while." This caused Enron Japan concern about FCPA violations.  Enron Japan discovered that E-Power Japan had struck two contracts with Taisei: one a "plain vanilla" consulting contract which has now expired and the other a more troubling consulting contract for Taisei to help E-Power Japan get a site location for a generator in Onuta Prefecture.

The political "patron" of Taisei Engineering is senior LDP politician Shizuka Kamei--runner-up in the LDP leadership last time around and one of the real insiders in Japan.  Seguchi and Taisei apparently used Kamei to pressure local government officials in Oita Prefecture on the northern island of Kyushu.  A deal of some kind was struck and Enron Japan/E-Power would now like to back away from the deal, both because of FCPA concerns and because the deal is not economically viable.  The northern grid is not an attractive investment for Enron Japan and there are problems bringing the power to the southern island of Honshu.

After all that, here is what we need:

1.	Background on the relationship between Taisei and the LDP, especially Kamei.

2.	Details on the links between Taisei and Japanese organized crime.

3.	Reputational information regarding Tetsuro Seguchi and Kyuji Takahashi, particularly ties to criminal groups or corrupt politicians.

4.	Possible political consequences for Enron Japan and E-Power Japan if we back away from the Oita deal, Kamei, and Taisei.

5.	Possible organized crime/security consequences for Enron Japan and E-Power Japan if we back away from the Oita deal, Kamei, and Taisei.

6.	Whether there are any links between the Taisei relationship and the "E-Rex" website articles published by "Sato" that criticized Enron Japan and E-Power.  One hypothesis is that the articles are a warning by an organized crime group to Enron.

7.	General reputational information concerning how Enron Japan and E-Power are perceived by the Japanese political and banking/energy industry elite.


We are expecting an initial report this Friday. It would be helpful for our investigators if you could send an electronic file of the Japanese language version of the E-Rex articles you sent to me a couple of weeks ago.

Let me know if the above is correct.

Thanks,

RJ