re : financial confirm np 6050 . 1 thanks for your prompt response . i really hope that you can convince mark
taylor that transferring the financial confirmations to calgary is the right
thing to do . as you recall , we have been down the road of improving the
service to calgary previously . this seems to work in the short term , but as
soon as there is turnover in the group , which unfortunately seems to occurs
regularly , the service level starts to drop . i would like you to consider
the following arguments in favor of transferring this function to calgary
when you meet with mark .
first , when the recommendation first came out to transfer to financial
confirmations to calgary , mark taylor ' s concern was our legal staff . at that
time , we had one attorney who did not have expertise in the financial area .
we now have three very competent attorneys . greg johnston has spent time in
houston and has recently attended an isda training course .
second , there are problems with the confirmations that are prepared by
houston and with the process itself . at the time of the project doorstep
audit , we provided you with a list of confirmations that had not been sent
out after we had approved them . as you saw from my memo , confirmations are
periodically sent out without our review . also , we have found mistakes in
the confirmations themselves , including the contract date referred to in the
confirmation . the first two issues cause me a lot of concern . some of the
confirmations sent out without our review were wrong , which is a big
problem . we had a large number of confirmations that were never sent out ,
which is even a bigger problem .
third , there is no real additional control in the process by having houston
generate the confirmations . if you think about what the process is , the
transactions are done in calgary , we fax the deal sheets to houston , the
confirmation is generated using a template that has been pre - approved by
legal , we review and approve the confirmation and execute them on - line if
done by enron canada corp . , or send an e - mail if the enron entity is enron
north america . houston faxes the confirms to the counterparty . if the
counterparty is a trading company , houston follows up on the status of
execution . for all other entities , the calgary office is now doing the
follow - up . all these transactions are currently settled out of the calgary
office . if the transactions were done in calgary , we would be using the same
pre - approved templates that houston is using . it is not clear to me where
there is any additional control by having the confirmations done in houston ,
or , conversely , why there is any additional risk in having calgary prepare
our own financial confirmations . if there is some perception that an element
of risk exists by having calgary prepare the financial confirmations , why are
we allowed to prepare the physical confirmations ?
fourth , there is a duplication of effort by having the preparation done in
houston while the review process is done in calgary . currently , houston has
staff handling the calgary transactions . because the confirmations are
reviewed and approved here , i have similar staff who print the confirmations ,
route them for review , update tagg , notify houston when the review is
complete , and then follow - up with either houston or the counterparty on
issues or execution . we are currently following up on all non - trading
company financial confirmations . so , we are both printing and reviewing the
transactions , following up with the counterparties , and filing these
documents . as i stated before , calgary could assume full responsibility for
the financial confirmations without adding any staff .
fifth , there is an increase in the amount of time needed to get the
confirmations to the counterparty by having the preparation done in houston .
because of the number of times the information has to go back and forth , the
confirmations rarely get to the counterparty within 24 hours of the
transaction being done . we feel this time line could be met if we did the
financial confirmations here . this reduces risk for enron .
finally , because we are a small office , i need the opportunity to develop my
existing employees so that they don ' t feel that they need to leave the
company in order to broaden their knowledge base . given the skill sets of
the documentation group , it is difficult for them to move into other areas
such as risk , logistics , or accounting , so it is important that i am able to
keep them challenged within the documentation group . because we review the
confirmations , the basic understanding of the financial transactions already
exists . however , i know that my employees would appreciate having full
accountability and responsibility for this function , and have the opportunity
to develop more expertise in the area of financial confirmations .
as a final note , i report to you . i am fully accountable to you for ensuring
that all the necessary controls are in place to handle this function
properly . it would mean a lot to me , as well as the documentation staff , to
get your vote of confidence in making the case to legal to transfer this
function to calgary . mark taylor has never met me or my staff , yet i get the
impression that he doesn ' t think we are capable of handling this function . i
hope that you will be able to set him straight on this . he just needs to
look at the results of our annual audits to see the level of competency that
exists here .
if you have any questions or need any additional clarification on anything in
this memo , please let me know . as you can see , the calgary office feels very
strongly about this issue , including rob milthorp and peter keohane . please
let me know how your meeting with mark goes .
thanks ,
peggy
enron north america corp .
from : sally beck 07 / 19 / 2000 04 : 57 pm
to : peggy hedstrom / cal / ect @ ect
cc :
subject : re : financial confirm np 6050 . 1
i got your message and i have asked brent to get with me when he is back in
the office on friday ( he has been in new york re : mg since monday night ) .
together we will do two things : ( 1 ) devise a foolproof plan to insure an
excellent level of service to calgary starting immediately , and ( 2 ) work with
mark taylor to understand his concerns over the movement of confirmation
preparation to calgary and to eliminate his concerns . we will keep you
posted on both items . - - sally
peggy hedstrom
07 / 19 / 2000 12 : 02 pm
to : sally beck / hou / ect @ ect
cc :
subject : re : financial confirm np 6050 . 1
just so that you are aware , we continue to have problems with the financial
confirm process from houston . on more than one occasion , confirmations have
been sent to our counterparties prior to review by calgary . attached is the
most recent one . we have been assured over and over that this will not
happen again , however , it continues to happen . luckily , this confirmation
went out without any errors in it . i know that you are very busy , but is
there any way that you can make it a priority to get resolution on moving the
financial confirmations to calgary .
- - - - - - - - - - - - - - - - - - - - - - forwarded by peggy hedstrom / cal / ect on 07 / 18 / 2000
02 : 10 pm - - - - - - - - - - - - - - - - - - - - - - - - - - -
from : larry joe hunter 07 / 18 / 2000 01 : 15 pm
to : peggy hedstrom / cal / ect @ ect
cc : diane anderson / na / enron @ enron , andrea r guillen / hou / ect @ ect
subject : re : financial confirm np 6050 . 1
peggy ,
as far as i can tell , we simply screwed up on this deal . diane anderson , who
was covering for angie last week , was using my name to sign off on some other
canada deals which were approved from last week then signed and sent this one
by mistake . we ' re terribly sorry for the mistake . call me if you want to
discuss .
thanks ,
joe
peggy hedstrom
07 / 18 / 2000 09 : 55 am
to : larry joe hunter / hou / ect @ ect
cc :
subject : financial confirm np 6050 . 1
since dianne seib is currently on vacation , i am reviewing the financial
confirms . for the referenced confirm , the status is currently showing ' sent
to counterparty " , although our records show that we have not yet approved the
revised confirm . can you check on this for me and let me know whether this
was sent prior to receiving calgary ' s approval ? if you have any questions , i
can be contacted at ext . 6753 .
thanks
peggy
re : financial confirm np 6050 . 1
thanks for your prompt response . i really hope that you can convince mark
taylor that transferring the financial confirmations to calgary is the right
thing to do . as you recall , we have been down the road of improving the
service to calgary previously . this seems to work in the short term , but as
soon as there is turnover in the group , which unfortunately seems to occurs
regularly , the service level starts to drop . i would like you to consider
the following arguments in favor of transferring this function to calgary
when you meet with mark .
first , when the recommendation first came out to transfer to financial
confirmations to calgary , mark taylor ' s concern was our legal staff . at that
time , we had one attorney who did not have expertise in the financial area .
we now have three very competent attorneys . greg johnston has spent time in
houston and has recently attended an isda training course .
second , there are problems with the confirmations that are prepared by
houston and with the process itself . at the time of the project doorstep
audit , we provided you with a list of confirmations that had not been sent
out after we had approved them . as you saw from my memo , confirmations are
periodically sent out without our review . also , we have found mistakes in
the confirmations themselves , including the contract date referred to in the
confirmation . the first two issues cause me a lot of concern . some of the
confirmations sent out without our review were wrong , which is a big
problem . we had a large number of confirmations that were never sent out ,
which is even a bigger problem .
third , there is no real additional control in the process by having houston
generate the confirmations . if you think about what the process is , the
transactions are done in calgary , we fax the deal sheets to houston , the
confirmation is generated using a template that has been pre - approved by
legal , we review and approve the confirmation and execute them on - line if
done by enron canada corp . , or send an e - mail if the enron entity is enron
north america . houston faxes the confirms to the counterparty . if the
counterparty is a trading company , houston follows up on the status of
execution . for all other entities , the calgary office is now doing the
follow - up . all these transactions are currently settled out of the calgary
office . if the transactions were done in calgary , we would be using the same
pre - approved templates that houston is using . it is not clear to me where
there is any additional control by having the confirmations done in houston ,
or , conversely , why there is any additional risk in having calgary prepare
our own financial confirmations . if there is some perception that an element
of risk exists by having calgary prepare the financial confirmations , why are
we allowed to prepare the physical confirmations ?
fourth , there is a duplication of effort by having the preparation done in
houston while the review process is done in calgary . currently , houston has
staff handling the calgary transactions . because the confirmations are
reviewed and approved here , i have similar staff who print the confirmations ,
route them for review , update tagg , notify houston when the review is
complete , and then follow - up with either houston or the counterparty on
issues or execution . we are currently following up on all non - trading
company financial confirmations . so , we are both printing and reviewing the
transactions , following up with the counterparties , and filing these
documents . as i stated before , calgary could assume full responsibility for
the financial confirmations without adding any staff .
fifth , there is an increase in the amount of time needed to get the
confirmations to the counterparty by having the preparation done in houston .
because of the number of times the information has to go back and forth , the
confirmations rarely get to the counterparty within 24 hours of the
transaction being done . we feel this time line could be met if we did the
financial confirmations here . this reduces risk for enron .
finally , because we are a small office , i need the opportunity to develop my
existing employees so that they don ' t feel that they need to leave the
company in order to broaden their knowledge base . given the skill sets of
the documentation group , it is difficult for them to move into other areas
such as risk , logistics , or accounting , so it is important that i am able to
keep them challenged within the documentation group . because we review the
confirmations , the basic understanding of the financial transactions already
exists . however , i know that my employees would appreciate having full
accountability and responsibility for this function , and have the opportunity
to develop more expertise in the area of financial confirmations .
as a final note , i report to you . i am fully accountable to you for ensuring
that all the necessary controls are in place to handle this function
properly . it would mean a lot to me , as well as the documentation staff , to
get your vote of confidence in making the case to legal to transfer this
function to calgary . mark taylor has never met me or my staff , yet i get the
impression that he doesn ' t think we are capable of handling this function . i
hope that you will be able to set him straight on this . he just needs to
look at the results of our annual audits to see the level of competency that
exists here .
if you have any questions or need any additional clarification on anything in
this memo , please let me know . as you can see , the calgary office feels very
strongly about this issue , including rob milthorp and peter keohane . please
let me know how your meeting with mark goes .
thanks ,
peggy
enron north america corp .
from : sally beck 07 / 19 / 2000 04 : 57 pm
to : peggy hedstrom / cal / ect @ ect
cc :
subject : re : financial confirm np 6050 . 1
i got your message and i have asked brent to get with me when he is back in
the office on friday ( he has been in new york re : mg since monday night ) .
together we will do two things : ( 1 ) devise a foolproof plan to insure an
excellent level of service to calgary starting immediately , and ( 2 ) work with
mark taylor to understand his concerns over the movement of confirmation
preparation to calgary and to eliminate his concerns . we will keep you
posted on both items . - - sally
peggy hedstrom
07 / 19 / 2000 12 : 02 pm
to : sally beck / hou / ect @ ect
cc :
subject : re : financial confirm np 6050 . 1
just so that you are aware , we continue to have problems with the financial
confirm process from houston . on more than one occasion , confirmations have
been sent to our counterparties prior to review by calgary . attached is the
most recent one . we have been assured over and over that this will not
happen again , however , it continues to happen . luckily , this confirmation
went out without any errors in it . i know that you are very busy , but is
there any way that you can make it a priority to get resolution on moving the
financial confirmations to calgary .
- - - - - - - - - - - - - - - - - - - - - - forwarded by peggy hedstrom / cal / ect on 07 / 18 / 2000
02 : 10 pm - - - - - - - - - - - - - - - - - - - - - - - - - - -
from : larry joe hunter 07 / 18 / 2000 01 : 15 pm
to : peggy hedstrom / cal / ect @ ect
cc : diane anderson / na / enron @ enron , andrea r guillen / hou / ect @ ect
subject : re : financial confirm np 6050 . 1
peggy ,
as far as i can tell , we simply screwed up on this deal . diane anderson , who
was covering for angie last week , was using my name to sign off on some other
canada deals which were approved from last week then signed and sent this one
by mistake . we ' re terribly sorry for the mistake . call me if you want to
discuss .
thanks ,
joe
peggy hedstrom
07 / 18 / 2000 09 : 55 am
to : larry joe hunter / hou / ect @ ect
cc :
subject : financial confirm np 6050 . 1
since dianne seib is currently on vacation , i am reviewing the financial
confirms . for the referenced confirm , the status is currently showing ' sent
to counterparty " , although our records show that we have not yet approved the
revised confirm . can you check on this for me and let me know whether this
was sent prior to receiving calgary ' s approval ? if you have any questions , i
can be contacted at ext . 6753 .
thanks
peggy