International Businesses Weather Pulp FX Interest Equities Bonds

International Businesses • Weather • Pulp • FX • Interest • Equities • Bonds • Softs • Metals • Global Liquids • Coal • Credit derivatives • North American Gas and Power • European Gas and Power

Weather Pre 2000 • Houston risk book, London originators • European transactions booked in ECTRIC through EEFT with back to ENA • Services agreement between ECTRIC and EEFT (cost + 5%) Post 2000 • Main risk book in Houston, small risk books in Oslo and Sydney, London origination • Oslo originated transactions booked in ECTRIC Norway branch with back to ENA [check] • London originated transactions booked in ECTRIC through EEFT with back to ENA • Sydney originations [check] • Services agreement between ECTRIC and EEFT for London origination activity (cost + 10%) and [Sydney] • Review of business changes quarterly

Pulp Pre 2000 • Houston risk book, London originators • London originated financial transactions booked in ECTRIC through EEFT with back to ENA • Services agreement between ECTRIC and EEFT (cost + 5%) Post 2000 • Main risk book in Houston, small risk book in London, plus origination • London originated financial transactions booked in ECTRIC through EEFT with back to ENA • Services agreement between ECTRIC and EEFT for London origination activity (cost + 10%) • Review of business changes quarterly

FX [interest] Pre 2000 • Houston risk book, London and Sydney originators • London originated transactions booked in ENA through agent EEFT. Sydney originated transactions booked in ENA through agent Enron Australia Finance Pty Ltd (“EAFPL”) • Services agreement between ENA and EEFT, and ENA and EAFPL (cost + 5%) Post 2000 • Main risk book in Houston, possibly small risk books in London and Tokyo (relocated from Sydney) • London originated transactions booked in ENA through agent EEFT. Sydney originated transactions booked in ENA through agent Enron Australia Finance Pty Ltd (“EAFPL”) • Services agreement between ENA and EEFT for London origination activity and ENA and EAFPL (cost + 10%) • Review of business changes quarterly

Equities and bonds Pre 2000 • No transactions executed outside of the US • Equities and bonds books in ECT Investments Inc Post 2000 • Structure for London based bonds and equities business is currently under discussion • Separate risk books for Houston and London, some trades expected between the books * Agent v CFC acting as principal * Regulatory issues

Softs Post 2000 • Proprietary softs business in Houston • Former Rudolf Wolff softs business in London conducts brokerage and financing business – future development of the business under commercial review (proprietary trading out of London ? ) * Regulatory issues

Metals Post 2000 • Financial – risk book in London (MGL). Agents in NY and Tokyo enter into trades on behalf of MGL. Book is passed. Compensation by way of commission. • Physical – risk book in London (MG MCC Ltd). Agents in NY and Montreal enter into trades on behalf of MG MCC Ltd. Compensation by way of commission. • Copper concentrates – risk book in NY (MG MCC Corp). • Business changes expected * brokerage * financing business * proprietary trading * Regulatory issues

Global Liquids Pre and Post 2000 • Separate risk books for * Houston * London * Singapore * Global Arb books • Financial and Physical transactions booked to the same product risk book eg. London Gasoil • Regulatory issues * EEFT agency compensated by commission agreement • Business changes – move to global books ?

Coal Pre 2000 • Separate risk books for Physical coal * Houston – N America * London – rest of world • Origination in Australia and India, compensated by commission agreement Post 2000 • London - Creation of European coal future market via EOL • London - Creation of Physical (ECSL) and Financial (ECTRIC) freight risk books • London - creation of new desk for transportation of domestic coal (rail freight, port throughput) • Australia - separate risk book for Australian originated transactions • Regulatory issues

Credit derivatives Post 2000 • Single risk book in London (Enron. Credit. com Ltd) • Trades involving the support of the Houston based personnel booked in ENA and backed into Enron. Credit. com Ltd * ENA compensated under services agreement • Regulatory issues in Europe

North American Gas and Power Pre and Post 2000 • Separate risk books in US (ENA) and Canada (ECT Canada Inc) • Trades between the risk books

European Gas and Power Pre and Post 2000 • Separate risk books * Physical UK (ECTRL) * Financial UK (ECTRI/EEFT) * Continental Physical (ECTRL) * Continental Financial (ECTRI/EEFT) * Scandinavian Physical and Financial (ECTRIC Norway) • Trades between the risk books • Regulatory issues • Centralised management of risk in London (except Norway) with European origination * hub and spoke * origination compensated on cost plus

Transfer pricing approach • Tax Dept. ’s response to Global books • APA • Services agreements versus trading profit allocation • Effective coordination • Recent tax developments