Status Report

Steve - when you get a chance, please take time to read David Merrill's
status report below. Frankly, I think he is trying his best to get on top of
the EBS tasks we have given him.

HOWEVER, having said that, and before having received his report below, I was
going to write you an e-mail indicating that I am afraid we cannot continue
to keep David in this role. I just returned from Tokyo (office opening,
meetings, etc.). There, I saw Sanjay, who confirmed his imminent new role
for EBS Asia, Anthony Duenner (President, EBS Asia), and Bill White, head of
EBS Asia Trading. David simply does not enjoy the confidence of his
commercial clients in EBS, and, notwithstanding my comments above about the
level of his effort, I do not see turning this around. His problem is not
any single one thing, but a cumulation of things, which I list below, but I
think it is the totality that feeds the general view:

1) He was probably only a decent fit with the old Enron APACHI, when it was
asset-focussed, and he could use his diplomatic experience to open doors for
projects. Even then, he was never an "Enron" person, in terms of our
culture, and being isolated in Singapore has probably not helped to get him
inculcated in the company culture. With EBS and Enron Asia taking a much
more "merchant" business focus, he just does not get it.

2) Chris Hunt (APACHI), and Jim Row (ex-EBS) encoureaged him to
develop/pursue origination leads. EBS does not want him doing that, and the
asset-focussed stuff he keeps tossing the way of the enrgy groups is grating
to them, given that they simply see him as not getting the message that the
company has moved away from assets.

3) Bill White tells me that he (David) has not performed well in a meeting.
It is a single data point, but Bill is also known to me from Enron Europe
days, and he is not a particularly critical person.

4) David only exacerbates this by being insecure about his role, and trying
too hard to sell himself to the clients/customers internally, and they find
this teidous.

5) Frankly, though it is not the only source of David's problems, I think he
was ill-served by Donald Lassere and XiXi (the associate), who I am confident
conducted what is know here as a "whispering campaign", i.e., "he does not
know what he is doing", "he is not an expert in the filed", and generally
acting like a pair of juveniles when it has come to any effort to bring a
sense of stability and order to the clients, e.g., "don't know what I am
supposed to be doing".

In any event, I simply do not see much prospect of persuading the EBS people
to give David a chance, and I think I will be doing myself no favours with
them by pushing it. SO, either we find another role, e.g., in in Washington,
and I am nor sure they need someone with David's skill sets, or we let David
go. Your thoughts?

In terms of supporting EBS Asia, I think the new guy I hired here in London
could do it quite capably, but all of the biz is either in Houston, or I am
told Sanjay is contemplating a move to Singapore, so, in eitheerr case, my
guy here can probably not be effective from the standpoint of being read into
the business. From where I am, I would prefer to have someone in Singapore
or Tokyo, rather than Houston, but the people in Houston may want someone
closer to them (I frankly think it is a mistake to try to build a business in
Asia from Houston). Sanjay mentioned the guy who is his General Counsel at
Dabhol Power Company, and I will discretely check with Jane Wilson on her
impressions (but he will not be "communications" literate/specialised).

Look forward to your ideas. mcs
---------------------- Forwarded by Mark Schroeder/LON/ECT on 05/11/2000
10:40 ---------------------------

David Merrill@ENRON_DEVELOPMENT
05/11/2000 07:05
To: Mark Schroeder@ECT
cc:

Subject: Status Report

Mark: Here is a status report:

I met with Anthony Duenner Friday in Korea. He approved expenses from
his budget for (1) some of the consulting work in Hong Kong that needs to be
done,
(2) Korean work with a law firm to see if we can get a new decision on
bandwidth
trading, (3) continuing expenses of the present tariff consultant in
Japan. I have
done separate e-mails on (1) and (2), copied to you. So that concern is
taken care of.

Everything seems to be going very well so far in the new assignment. Thanks
for
giving me the lead. Here is country by country status:

Korea: I went up the learning curve a lot on the Korea trip (see sep
e-mail on the
regulatory problem we discovered and proposed strategy to deal with it). I
now feel
very much on top of Korea. Will go back to advance the work on overturning
the
adverse regulatory ruling. To my mind this is exactly what a regulatory
review should
do - - identify regulatory risks before we go in.

Hong Kong: We have identified somebody in EBS to do the system
configuration report.
I am going to go up there to advance the tariff submission that is due before
year end.

Japan: I need to get up there and get up to speed on what the consultant is
doing on tariff and
terms and conditions.

Singapore: I am reminding the lawyers to get a corporate entity selected so
we can
proceed with a license and tax incentive application.

Taiwan: I will be doing a Taiwan regulatory review similar to Korea but
lower priority.
Will probably be January. Also was approved by Duenner. Never did find
out what his
people did there, but I will.

David