re : metals - imminent actions - an update rick
actions for it contingency - may i get back to you on this , as we had set
tomorrow as a deadline internally to discuss status of it efforts on bug
fixing and the wider resourcing plan for inventory control coding .
additionally , i am reviewing with my middle office staff our contingency plans
actions for sap - we have decoupled the merchanting business implementation
from the financial brokerage business implementation ( where the greatest
operational risk and therefore sap benefits exist ) . we are still go live for
the brokerage business as at 1 april . i will forward the communication letter
re decoupling in due course
regards
mike
richard causey @ enron
28 / 02 / 2001 21 : 39
to : mike jordan / lon / ect @ ect
cc : rick buy / hou / ect @ ect , sally beck / hou / ect @ ect , fernley dyson / lon / ect @ ect ,
michael r brown / lon / ect @ ect , ted murphy / lon / ect @ ect
subject : re : metals - imminent actions - an update
so what are the actions coming out of this ? just pushing it ( who don ' t seem
to have the as 400 resources ) won ' t fix the problem . also , what is the plan
re sap ?
mike jordan @ ect
02 / 26 / 2001 01 : 11 pm
to : richard causey / corp / enron @ enron , rick buy / hou / ect @ ect , sally
beck / hou / ect @ ect
cc : fernley dyson / lon / ect @ ect , michael r brown / lon / ect @ ect , ted
murphy / lon / ect @ ect
subject : metals - imminent actions - an update
rick / rick / sally
i attach the ' executive ' summary of a note sent to the office of the chair
last week detailing current operational difficulties with the metals
merchanting business . subsequently an ' all hands ' meeting was called to
discuss the operational issues and the business imperatives of
off balance sheet facility ( " obsf " ) renegotiation
minimising working captial
sap implementation
the notes of that meeting are also attached at the bottom of this email
should you require any further information please call , otherwise i will
forward updates as they are completed .
regards
mike
issue
the physical metals business implemented an off balance sheet structure
( obsf ) pre year - end to meet enron requirements for gearing ratios .
whilst this does not present undue problems for lme warrants , these being
bearer documents , it does present an issue when physical metal , the value of
which depends upon brand and location , is placed into the facility . given the
hard deadline of year - end the operational support of this process initially
took place on spreadsheets .
the impact of the obsf on the operational side of the physical business
should not be underestimated . the process of moving material off and on
balance sheet places considerable strain from trading through to settlements ,
particularly when there is an absence of necessary control functionality in
the as 400 . with the specified functionality it is believed that all
operational and trading issues arising from obsf can be managed
satisfactorily .
the core functionality , which was due prior to the year - end , was released
during january but was subsequently found to have introduced  + bugs  , to the
integrated business control processes . whilst an improvement on having no
obsf functionality , the  + bugs  , have had an increasingly negative effect on
the control environment , compounded by the fact that it can not provide a
guaranteed delivery for the  + bug  , fixes and non core  , reporting  ,
functionality .
this has given rise to the following concerns :
? there are insufficient experienced resources to fully reconcile stock at a
brand & location level to coordination records ( the global position is
reconciled however ) .
? it is not possible to substantiate the dpr for em & cl as :
? a ) p & l on spread moves from cash to 3 months positions ( and related cash to
3 months provisions ) can not be produced by the system and must be estimated ,
and
? b ) system bugs have created uncertainties over trial balance values .
these concerns are compounded by the following :
? the most experienced as 400 it developer for the em & cl business has
resigned . he is currently working his 6 months notice which will expire in
july 2001 .
? the most experienced as 400 it developer on the eml side of the business has
also resigned . he left in january 2001 .
? there is no documentation for the as 400 . it is therefore difficult for
experienced as 400 programmers to get upto speed on the system .
conclusion
it is essential that we do not become hostages to the development of the
as 400 system and the renegotiation of the obsf facility with barclays . the
current situation has arisen due to non - delivery of it developments and tight
timescales on the finalisation of the obsf facility .
to meet ql end requirements ( i . e . full production of the dpr and stock
reconciliation ) , it and the obsf deal team must make concrete commitments on
delivery timeline . the business will not be able to commit to successful
implementation of the facility and resubstantiation of the trial balance
without these
- - - - - - - - - - - - - - - - - - - - - - forwarded by mike jordan / lon / ect on 26 / 02 / 2001 16 : 18
- - - - - - - - - - - - - - - - - - - - - - - - - - -
mike jordan
26 / 02 / 2001 16 : 18
to : michael r brown / lon / ect @ ect , fernley dyson / lon / ect @ ect , joe
gold / lon / ect @ ect , michael farmer / eu / enron @ enron , michael j
hutchinson / eu / enron @ enron , anne edgley / lon / ect @ ect , melissa
allen / lon / ect @ ect , mark pickering / lon / ect @ ect , paul chivers / lon / ect @ ect ,
robert campbell / lon / ect @ ect , andrew cornfield / lon / ect @ ect , howard
carter / eu / enron @ enron , bill appleby / lon / ect @ ect , david p tregar / eu / enron @ enron
cc :
subject : metals - imminent actions - notes of meeting 23 rd feb
to all
i seek to clarify the actions discussed at friday ' s meeting and to emphasise
the critical importance of getting all the below completed as quickly as
possible to meet our ql requirements ( revenue targets , balance sheet
targets , interest expense minimisation etc ) . the proposed tactical plan that
was circulated is not attached as it has already been superceded !
there was agreement on several broad areas of immediate focus with specific
objectives and accountabilities -
it resourcing
communicate priority to hr about the importance of obtaining skilled as 400
programmers - for tactical short term and for long term work - action mp
resourcing for long term as 400 ' off - load ' initiative to be completed asap -
action mp
merchanting resource focus to be on bug fixes impacting mo ability to update
obsf options in as 400 and for traffic to update recent location movements of
stock in obsf - action rc ( deadline 1 week )
completion of inception document for full obsf inventory control
functionality - action rc ( deadline 1 week )
split of resources for sap interface - only eml sap implementation is now
planned for 1 / 4 / 01 - action rc to confirm resource reallocation 27 / 01
immediate improvement in it operations support required ( including
completion of transfer of support responsibility from dev . to ops . ) - action
mp
operational support
mo risk / trade accounting resources to focus on rebooking all remaining
transactions on obsf inventory spreadsheet - action hc ( deadline asap )
validation of system generated p & l to commence following the above - action
hc ( deadline asap )
timetable for catch up of traffic obsf location movements to be completed
with john lunzer 27 / 02 - action hc
determine action for improvement in delivering metal to facility ( initial
assumption for recent working capital increase was that we had operationally
slowed down in placing qualifying material into facility ) - action hc / ac
( deadline asap )
working capital
detailed daily analysis of working capital movements to be produced and
formatted in style of sources and uses of funds ( including facility
headroom ) - action ac ( deadline asap )
forward estimate of working capital to be produced for rest of quarter and
used for estimation of full interest expense - action ac , mj & ma ( deadline
asap )
analysis for trade receivables ( and reasons for recent increase ) and
investigation of possible factoring - ac / mj and ae / ba ( deadline asap )
determining extent to which pricing signals for working capital usage can be
communicated to traders , traffic and operations - action jg , mj ( contingent
on above )
obsf negotiation
documentation of current negotiation issues ( including aa sign - off issues )
to be drafted and circulated with clear accountabilities - action ma / dt / ba
( deadline 26 / 3 )
operational impact of agreement to be considered in parallel to negotiation -
action hc / ac / ba
lme relationship
consider utilising a us subsidiary to book obsf transactions to negate lme
reviewing facility as part of regulatory regime - action ma / fd
monitoring notice of investigation issued by lme - action fd / dt
re : metals - imminent actions - an update
rick
actions for it contingency - may i get back to you on this , as we had set
tomorrow as a deadline internally to discuss status of it efforts on bug
fixing and the wider resourcing plan for inventory control coding .
additionally , i am reviewing with my middle office staff our contingency plans
actions for sap - we have decoupled the merchanting business implementation
from the financial brokerage business implementation ( where the greatest
operational risk and therefore sap benefits exist ) . we are still go live for
the brokerage business as at 1 april . i will forward the communication letter
re decoupling in due course
regards
mike
richard causey @ enron
28 / 02 / 2001 21 : 39
to : mike jordan / lon / ect @ ect
cc : rick buy / hou / ect @ ect , sally beck / hou / ect @ ect , fernley dyson / lon / ect @ ect ,
michael r brown / lon / ect @ ect , ted murphy / lon / ect @ ect
subject : re : metals - imminent actions - an update
so what are the actions coming out of this ? just pushing it ( who don ' t seem
to have the as 400 resources ) won ' t fix the problem . also , what is the plan
re sap ?
mike jordan @ ect
02 / 26 / 2001 01 : 11 pm
to : richard causey / corp / enron @ enron , rick buy / hou / ect @ ect , sally
beck / hou / ect @ ect
cc : fernley dyson / lon / ect @ ect , michael r brown / lon / ect @ ect , ted
murphy / lon / ect @ ect
subject : metals - imminent actions - an update
rick / rick / sally
i attach the ' executive ' summary of a note sent to the office of the chair
last week detailing current operational difficulties with the metals
merchanting business . subsequently an ' all hands ' meeting was called to
discuss the operational issues and the business imperatives of
off balance sheet facility ( " obsf " ) renegotiation
minimising working captial
sap implementation
the notes of that meeting are also attached at the bottom of this email
should you require any further information please call , otherwise i will
forward updates as they are completed .
regards
mike
issue
the physical metals business implemented an off balance sheet structure
( obsf ) pre year - end to meet enron requirements for gearing ratios .
whilst this does not present undue problems for lme warrants , these being
bearer documents , it does present an issue when physical metal , the value of
which depends upon brand and location , is placed into the facility . given the
hard deadline of year - end the operational support of this process initially
took place on spreadsheets .
the impact of the obsf on the operational side of the physical business
should not be underestimated . the process of moving material off and on
balance sheet places considerable strain from trading through to settlements ,
particularly when there is an absence of necessary control functionality in
the as 400 . with the specified functionality it is believed that all
operational and trading issues arising from obsf can be managed
satisfactorily .
the core functionality , which was due prior to the year - end , was released
during january but was subsequently found to have introduced  + bugs  , to the
integrated business control processes . whilst an improvement on having no
obsf functionality , the  + bugs  , have had an increasingly negative effect on
the control environment , compounded by the fact that it can not provide a
guaranteed delivery for the  + bug  , fixes and non core  , reporting  ,
functionality .
this has given rise to the following concerns :
? there are insufficient experienced resources to fully reconcile stock at a
brand & location level to coordination records ( the global position is
reconciled however ) .
? it is not possible to substantiate the dpr for em & cl as :
? a ) p & l on spread moves from cash to 3 months positions ( and related cash to
3 months provisions ) can not be produced by the system and must be estimated ,
and
? b ) system bugs have created uncertainties over trial balance values .
these concerns are compounded by the following :
? the most experienced as 400 it developer for the em & cl business has
resigned . he is currently working his 6 months notice which will expire in
july 2001 .
? the most experienced as 400 it developer on the eml side of the business has
also resigned . he left in january 2001 .
? there is no documentation for the as 400 . it is therefore difficult for
experienced as 400 programmers to get upto speed on the system .
conclusion
it is essential that we do not become hostages to the development of the
as 400 system and the renegotiation of the obsf facility with barclays . the
current situation has arisen due to non - delivery of it developments and tight
timescales on the finalisation of the obsf facility .
to meet ql end requirements ( i . e . full production of the dpr and stock
reconciliation ) , it and the obsf deal team must make concrete commitments on
delivery timeline . the business will not be able to commit to successful
implementation of the facility and resubstantiation of the trial balance
without these
- - - - - - - - - - - - - - - - - - - - - - forwarded by mike jordan / lon / ect on 26 / 02 / 2001 16 : 18
- - - - - - - - - - - - - - - - - - - - - - - - - - -
mike jordan
26 / 02 / 2001 16 : 18
to : michael r brown / lon / ect @ ect , fernley dyson / lon / ect @ ect , joe
gold / lon / ect @ ect , michael farmer / eu / enron @ enron , michael j
hutchinson / eu / enron @ enron , anne edgley / lon / ect @ ect , melissa
allen / lon / ect @ ect , mark pickering / lon / ect @ ect , paul chivers / lon / ect @ ect ,
robert campbell / lon / ect @ ect , andrew cornfield / lon / ect @ ect , howard
carter / eu / enron @ enron , bill appleby / lon / ect @ ect , david p tregar / eu / enron @ enron
cc :
subject : metals - imminent actions - notes of meeting 23 rd feb
to all
i seek to clarify the actions discussed at friday ' s meeting and to emphasise
the critical importance of getting all the below completed as quickly as
possible to meet our ql requirements ( revenue targets , balance sheet
targets , interest expense minimisation etc ) . the proposed tactical plan that
was circulated is not attached as it has already been superceded !
there was agreement on several broad areas of immediate focus with specific
objectives and accountabilities -
it resourcing
communicate priority to hr about the importance of obtaining skilled as 400
programmers - for tactical short term and for long term work - action mp
resourcing for long term as 400 ' off - load ' initiative to be completed asap -
action mp
merchanting resource focus to be on bug fixes impacting mo ability to update
obsf options in as 400 and for traffic to update recent location movements of
stock in obsf - action rc ( deadline 1 week )
completion of inception document for full obsf inventory control
functionality - action rc ( deadline 1 week )
split of resources for sap interface - only eml sap implementation is now
planned for 1 / 4 / 01 - action rc to confirm resource reallocation 27 / 01
immediate improvement in it operations support required ( including
completion of transfer of support responsibility from dev . to ops . ) - action
mp
operational support
mo risk / trade accounting resources to focus on rebooking all remaining
transactions on obsf inventory spreadsheet - action hc ( deadline asap )
validation of system generated p & l to commence following the above - action
hc ( deadline asap )
timetable for catch up of traffic obsf location movements to be completed
with john lunzer 27 / 02 - action hc
determine action for improvement in delivering metal to facility ( initial
assumption for recent working capital increase was that we had operationally
slowed down in placing qualifying material into facility ) - action hc / ac
( deadline asap )
working capital
detailed daily analysis of working capital movements to be produced and
formatted in style of sources and uses of funds ( including facility
headroom ) - action ac ( deadline asap )
forward estimate of working capital to be produced for rest of quarter and
used for estimation of full interest expense - action ac , mj & ma ( deadline
asap )
analysis for trade receivables ( and reasons for recent increase ) and
investigation of possible factoring - ac / mj and ae / ba ( deadline asap )
determining extent to which pricing signals for working capital usage can be
communicated to traders , traffic and operations - action jg , mj ( contingent
on above )
obsf negotiation
documentation of current negotiation issues ( including aa sign - off issues )
to be drafted and circulated with clear accountabilities - action ma / dt / ba
( deadline 26 / 3 )
operational impact of agreement to be considered in parallel to negotiation -
action hc / ac / ba
lme relationship
consider utilising a us subsidiary to book obsf transactions to negate lme
reviewing facility as part of regulatory regime - action ma / fd
monitoring notice of investigation issued by lme - action fd / dt