Re: Security and Human Rights Policy Question

John:

Thank you again for your help on this. I think your points are valid and had
a few thoughts that might help to clarify.

The State Department and UK Foreign Commercial Office developed these
principles with the intent that the principles would serve as broad
guidelines, general enough to apply to any company in any industry. As you
will note, with the exception of the title, the principles are general and
applicable to any company involved with hiring security to protect an
facility and/or asset - be it in the U.S. or otherwise.

I agree that we may need to distinguish ourselves from the typical extractive
sector participant. Should we agree to support the principles, I suggest
that we draft the letter so that it distinguishes Enron from the other
participating companies. The letter (and maybe Dept. of State) could also
note that Enron is the first company outside of the extractive sector to
support these principles. This would go a long way in demonstrating our
leadership on the issue of human rights.

Also, we may want to consider that while we may be exiting the asset
development business by selling our pipelines and power plants, we are taking
equity positions (albeit minority and/or short term) in industries that do
fall into the category of extractive industries such as coal and metals. To
date, we have already received inquiries about our activities in these
sectors, particularly in the coal sector.

With respect to public accountability, we will continue to be criticized for
not being accountable in this area unless we take some policies steps in this
area. Our stakeholders and "critics" are aware that we do not have policies
and procedures addressing security arrangements. In addition, they are aware
that we have participated in this discussion and dialogue because it is our
intent to strengthen our human rights policies and performance. Until now,
the weakness in our critics' arguments (with respect to India and otherwise)
has been the lack of benchmarks and/or guidelines with respect to this
issue. However, once these guidelines are public, it will be difficult to
maintain the position that there is a lack of consensus on the issue.

A risk we should consider: should we decide not to support the principles,
the NGOs and others will be asking us why we have not adopted these/and or
any guidelines. These guidelines are particularly attractive because they
have been developed in collaboration with government, industry and NGOs -
rather than by one particular interest.

I hope this is helpful and look forward to your feedback. I am in the
Washington office today, but can be reached on my cell at 917-821-0724,

Thanks again,

Lauren

From: John Schwartzenburg@ENRON_DEVELOPMENT on 11/13/2000 02:02 PM
To: Lauren Goldblatt@ECT, Kelly Kimberly@Enron Communications, Mark
Palmer@ENRON_DEVELOPMENT
cc: Steven J Kean@EES, Vicki Sharp@EES

Subject: Security and Human Rights Policy Question

We are finishing the legal comments to the Security and Human Rights paper
that Lauren Goldblatt circulated for legal review, and will finalize it today
ot tomorrow.

Before get the detailed comments out, however, there is a threshold policy
issue that needs to be considered:

These guidelines expressly applicaty to the "Extractive Industries", which
are typically thought of as the mining and oil and gas exploration and
development industries. The companies listed as cooperating with the UK and
US governments and the NGO's in producing the principles do not include Enron
peers. Enron has only one unit that is engaged in that economic sector, and
that unit is being sold right now. None of Enron's other units are in what
would normally be referred to as an extractive industry.

Since that is the case, we wonder if Enron has made an appropriate level
policy decision to publicly endorse these principles and make them corporate
policy when the company is energetically exiting its only remaining business
line that is in the express industrial peer group targeted by the
principles? At first I understood that such a decision had been taken, but
Vicki and I wanted to confirm that before proceeding.

There are two major concerns:

Endorsing the principles would would identify Enron more closely with the
members of a particular peer group that Enron is consciously exiting and
distingushing itself from.

Once Enron endorses the principles, the fact of that endorsement, the
resulting public "accountability" for the principles, and the consequent
need to demonstrate compliance will become essentially a permanent feature.
Once endorsed, it would be nearly impossible for the Company to distance
itself from the guidlines. That being the case, should Enron at this juncture
endorse the guidelines when it could do so later if it ever makes a committed
re-entry into the extractive industry?

Are there other security type principles that are more appropriate to or
focused on our new core business lines, or the remaining asset ownership and
construction lines that Enron should be looking at instead?

Please call either me at 713-646-6309 to discuss. You can also call Vicki
Sharp at 713-853-7413.

Thanks.