Re: discussion

All of your concerns are valid, and I too would like to work through them
with you. As info, Mike will be over in two weeks. Organizationally,
strategically, talent, and back office--we will get there. Who particularly
are you worried about. As far as your situation, let's talk numbers. I'd
like you to believe that trading, and management, particularly your
leadership, will pay off for you.

Later....Jeff

Chris Mahoney
01/31/2001 03:02 PM

To: Jeffrey A Shankman/HOU/ECT@ECT
cc:
Subject: discussion

jeff,
when I came to Houston in late December there were, if you recall, a number
of issues that
I had hoped to discuss with you. We only really scratched the surface with
the reorganisation
announced today. I would prioritise them as follows:

1) recruiting, training, and keeping talent.
there is a lack of depth in the organisation. to make matters worse most of
the recruiting was
done by greg whalley and now all of those traders are on expiring or expired
contracts. the
fact that all of them on the international side received bonuses less than
last year doesn't
help. also the industry is expansion mode so it is harder to recruit and
keep talent. we are
running the risk of getting left with the unhireable and losing the best.

2) vision.
having worked for enron for three years i realise that the company seeks
self-starters. one of
the frustrations that I have in Europe, and is a problem with the group
overall, is that too many of
the employees are on their heels waiting for direction from above. that is
one of the things I was
hoping we might address in a reorganisation that shrunk the business units.
smaller teams would
be more focused on opportunities to grow the business, communicate better,
and energise the
environment. still we need as senior management to discuss in a more
specific sense where we
need to improve the most. you have identified customer business, eol, and
research as the three
key areas. I would like to discuss with you the priority of being able to
sell physical fuels. the easiest
thing to do is get long expensive oil and the hardest thing to do is develop
a system. this group has
made almost no progress in developing a physical system. that is what I will
be working on in the
heating, diesel, and jet fuel markets. I would have thought the greatest and
first opportunity that we
need to be exploiting is fuel supply to utilities. btu related shorts, that
leverage upon our existing gas
contacts, would seem to be our greatest inherent advantage vs our
competition. also it could focus
our fuel oil and middle distillate group on the opportunities between gas and
liquids. The relationships
have never been closer and this seems to be a situation that could remain for
a long time. the u.s.
presents more opportunites but we are making good progress in developing
financial hedging
business in europe with continental gas and I'm pushing the origination
groups in Europe to look
into the physical supply opportunities.

3) systems.
I'm going to spend sometime with Brent Price tomorrow but my conclusion on
doing the post-mortem
on Spain is that we need to resource the back office significantly before we
can significantly grow
the business. They are struggling to keep up at the moment and the process
seems very bureaucratic
and inefficient. This worries me because if you look at the problems that we
have gotten into in the past
we don't seem to have made great progress in eliminating the probability of
there reoccurance.

now in terms of the situation with myself. please put yourself in my shoes
for a minute. I have had no
life for the last year sorting out the crap of others (q1 - helsinki/q4 -
spain). in the middle part of the year
I had to spend much time addressing the people issues and other problems
created by the vacumn of
no managment in London for over a year. Was able to coordinate a good profit
on the gasoil books that
was pissed away. In addition, I have had to take back over the book because
ross was not capable
of managing the short gamma position that was chopping him up. the point
being that managing didn't
pay. I have to run but these I want to discuss.