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Enron Mail |
FYI.
----- Forwarded by Alan Aronowitz/HOU/ECT on 09/25/2000 05:49 PM ----- Edwin.T.Whatley@BAKERNET.com 09/24/2000 10:54 PM To: Susan.Musch@enron.com cc: jane.mcbride@enron.com, john.viverito@enron.com, Jeremy.Pitts@BAKERNET.com, Alan.Aronowitz@enron.com, Paul.TYO.Davis@BakerNet.com, Yukinori.Watanabe@BAKERNET.com Subject: Enron: Japan-Based Trader/PE and TP Issues Dear Susan: We confirm that we continue to recommend the basic approaches put forward in the June 23, 2000 memo: either (1) use back-to-back transactions if it is essential to have Japan-based personnel trading for ENA or other offshore affiliates or (2)(preferable purely from the tax standpoint if acceptable in light of operational considerations) have personnel at Enron Australia (or other affiliate in an appropriate time zone) handle the Japan trading. Your description of the back-to-back trades as "mirror" transactions is correct in the sense that the trades would be symmetrical in order to transfer to ENA or other offshore affiliate the position it wants to take in the covered trade. The terms might differ depending what decision is made about what mechanism to compensate Enron Japan for transfer pricing purposes, i.e., if some margin were built into the back-to-back trades to compensate Enron Japan. As discussed in our June 23 memo, the transfer pricing issues are potentially difficult in view of the limited authority in this area, but in our view, such pricing issues would present less exposure than structuring the operation so that it would constitute a PE. If you have any questions, or if we can provide further assistance with this matter, please let us know. Best regards, Y. Watanabe/E. Whatley Edwin.T.Whatley@bakernet.com Phone: 81-3-3796-5857 Fax:81-3-3479-4224 Registered in Japan as an Attorney at Foreign Law; Jurisdiction of Primary Qualification--California; Designated Law--Washington, D.C. and All U.S. States Except Louisiana -----Original Message----- From: Susan.Musch@enron.com [mailto:Susan.Musch@enron.com] Sent: Monday, September 25, 2000 10:41 AM To: Paul.TYO.Davis@BakerNet.com; Edwin.T.Whatley@BAKERNET.com Cc: jane.mcbride@enron.com; john.viverito@enron.com; Jeremy.Pitts@bakernet.com; Alan.Aronowitz@enron.com Subject: Re: Trader Paul and Ed, I want to confirm my understanding of your advice from last week (attached below). I think you're advising consistent with what Ed had advised back in June, but I'm not totally sure. That is, it would be best to have back-to-back trades between Enron Japan ("EJ") and Enron North America ("ENA"). Under this scenario, DD would be an EJ employee who would enter into the trades for EJ as principal. Then, EJ would enter into mirror trades with ENA. The issue, as I understand it, under this scenario is that the NTA could assert transfer pricing issues if the trades between EJ and ENA weren't at arms' length. Would you please confirm that this is your conclusion on how the trades should be structured? I am trying to get this structure resolved by Monday night (Houston time) so I would appreciate your thoughts in an e-mail during your Monday. Best regards, Susan
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